Xinjiang Tianfu Energy (SH:600509) GF SECURITIES·2024-06-19 02:01Investment Rating - The report assigns a "Buy" rating for Tianfu Energy [2]. Core Views - Tianfu Energy is positioned as the largest integrated power and network platform in the Xinjiang Production and Construction Corps, with asset integration solidifying its core position [54][84]. - The company has seen significant improvement in its business scale and profitability, with a notable recovery in 2023, achieving a net profit of 431 million yuan, a year-on-year increase of 630 million yuan [84]. - The company benefits from its integrated power generation, transmission, and distribution model, which is expected to reduce reliance on high-cost purchased electricity [68]. Summary by Sections 1. Asset Integration and Business Expansion - Tianfu Energy is the largest independent local power grid in the Xinjiang Production and Construction Corps, providing comprehensive energy services in the Shihezi area [54]. - The company has undergone an asset restructuring, with the controlling shareholder changing to China New Power Group, which aims to integrate power resources and develop renewable energy projects [56][81]. - The company’s main businesses, including electricity, heat, water, and natural gas, hold a natural monopoly in the Shihezi region, with plans for significant industrial growth in the area [54][56]. 2. Advantages of Integrated Power Generation and Distribution - The company has seen a substantial increase in revenue due to the implementation of a dual pricing policy for electricity in 2023, alongside a decrease in coal prices and reduced purchased electricity [84]. - The company maintains strategic partnerships with multiple coal suppliers, enhancing its operational efficiency and cost management [61][68]. - The development of renewable energy projects is expected to stabilize downstream demand and further enhance profitability [68]. 3. Expansion in Natural Gas Market and New Materials Industry - Tianfu Energy is actively expanding its natural gas market presence and has made acquisitions to enhance its position in the silicon carbide new materials industry [84]. - The company has acquired a 51% stake in Xinjiang Yunrun Energy, which holds a pipeline franchise in the region, contributing to increased gas supply [61]. 4. Profit Forecast and Investment Recommendations - The report forecasts net profits for Tianfu Energy to reach 627 million yuan, 757 million yuan, and 858 million yuan from 2024 to 2026, respectively [84]. - The company is expected to benefit from its integrated platform and resource consolidation, with a target price of 7.36 yuan per share based on a 1.3x price-to-book ratio for 2024 [84].