Three Gorges Energy: the company speeds up the construction of offshore wind power and the installed capacity is expected to increase steadily [Agency Review]

Three Gorges Energy announced that the company will invest in the construction of the three Gorges Yang JIANG Qingzhou 5th, 6th and 7th offshore wind farm projects, with a total planned installed capacity of 3 million kilowatts and a total investment of 41.17 billion yuan. The project is expected to be connected to the grid in 2024.

The company is a leading enterprise in the operation of new energy. Under the goal of "carbon neutralization", the demand for green electricity will continue to grow, and the company's scale as a new energy power supplier will continue to expand. There are a number of support policies introduced in the fourth quarter, we believe that the follow-up company financing costs will be reduced, and the situation of green power grid connection is expected to be further improved, which is good for the development of the company. In addition, as green power is not included in the energy consumption index, with the deepening of power market transactions, green power premium space can be expected in the future. We estimate that the net profit of the company in 2021, 2022 and 2023 is 5.28 billion yuan, 6.99 billion yuan and 8.31 billion yuan respectively, and the YOY is + 46%, + 32.4% and + 18.8% respectively. The current share price is 39 times, 30 times and 25 times for 2021, 2022 and 2023, respectively. It is recommended to "buy".

Company to increase the size of large-scale offshore wind power projects: the company announced that it will invest in the construction of the three Gorges Yang jiang Qingzhou 5th, 6th and 7th offshore wind farm projects. the planned installed capacity of the three projects is all 1 million kilowatts, totaling 3 million kilowatts. After the release of this plan, the company's planned installed capacity of offshore wind power in Yangjiang has reached 5 million kilowatts, of which 2 million kilowatts will be put into production. The investment amount of the Green Island 5, 6 and 7 projects is 14.05 billion yuan, 13.76 billion yuan and 13.36 billion yuan respectively, totaling 41.17 billion yuan. Among them, the proportion of project capital is 25%, that is, the company will contribute 10.292 billion yuan, and the remaining 30.878 billion yuan will be obtained through financing. The three Gorges Yang jiang Qingzhou No. 6 Project plans to be fully connected to the grid in December 2024, while the fifth and seventh projects are scheduled to be fully connected in December 2024. High-quality wind resources, lower equipment costs, and the advantage of large-scale development will support the profitability of this affordable project.

According to the company's semi-annual report, by the end of June 2021, the company has put into production 9.411 million kilowatts of wind power, including 1.487 million kilowatts of offshore wind power. With the phased commissioning of the Yangjiang project the company's offshore wind power installation will increase significantly. As of the semi-annual report, the company's wind power and photovoltaic installed capacity totaled 16.437 million kilowatts; the company expects that during the 14th five-year Plan period, the annual new energy installed capacity will not be less than 5 million kilowatts, and the company's power generation growth has strong certainty.

The company issues equity incentive policy: the company issues a draft incentive plan for 2021, which intends to grant restricted shares to no more than 212incentive targets, with a total amount of no more than 60.9 million shares, accounting for about 0.213% of the share capital. The incentive targets include company directors, senior executives, management, technical and business backbones. The performance conditions for the plan to lift the sales restrictions are that operating income in 2022, 2023 and 2024 is not less than 15%, 16.5% and 18% respectively compared with the compound growth rate in 2020, and the ROE in 2022, 2023 and 2024 is not less than 7.73%, 7.8% and 8.0%, respectively. The grant price of the first restricted stock is 3.38 yuan per share. Equity incentive policy is expected to enhance employee cohesion, stimulate the enthusiasm of the management team, and is conducive to the sustainable development of the company.

Profit forecast: we expect the company's net profit in 2021, 2022 and 2023 to be 5.28 billion yuan, 6.99 billion yuan and 8.31 billion yuan respectively, and the YOY is + 46%, + 32.4% and + 18.8% respectively. The current share price is 39 times, 30 times and 25 times for 2021, 2022 and 2023, respectively. It is recommended to "buy".