ZMNY(SH:600163) Huachuang Securities·2024-04-17 12:01Investment Rating - The report gives a "Strong Buy" rating for the company with a target price of 5.8 yuan, representing a 31% upside from the current price of 4.42 yuan [1][9] Core Views - The company is a clean energy power generation platform with a strong focus on offshore wind power in Fujian province [5][14] - There are two common misconceptions about offshore wind power in Fujian: 1) concerns about price discounts due to market-based trading and curtailment risks 2) risks from the competitive allocation mechanism in recent years [5][8] - Fujian has excellent wind resources and high development potential, with offshore wind power still in the early stages of development [5][8] - As a provincial state-owned enterprise, the company has competitive advantages and is expected to receive government support and resource allocation [5][8] - The company is expected to benefit from asset injections from its parent group, which could significantly boost its performance [5][9] Company Overview - The company was established in 1998 and is the listed power platform under Fujian Investment Group [5][14] - As of Q3 2023, the company had 957.3 MW of installed capacity, including 611.3 MW onshore wind, 296 MW offshore wind, 20 MW solar PV and 30 MW biomass [5][14] - Offshore wind projects contributed about 4.2 billion yuan in annual profit due to high feed-in tariffs of 0.85 yuan/kWh [16][43] - The company has stable profitability with ROE maintained at 13%-16% and low debt ratio of 45.2% as of Q3 2023, providing leverage space for future projects [22] Industry Analysis - Fujian plans to reach 85 GW of total power capacity by 2025, including 9 GW of wind power (4.1 GW new) and over 10 GW of offshore wind development [5][63] - Fujian's wind and solar share in power mix is lower than national average, creating urgent need for renewable energy development [63][93] - Offshore wind power in Fujian has advantages in utilization hours (3300-4100 hours) and wind speed (7.5-10 m/s) compared to other coastal provinces [89][90] - Global offshore wind LCOE has declined significantly from $0.197/kWh in 2010 to $0.081/kWh in 2022, improving project economics [98][100] Financial Projections - Revenue is expected to grow from 1.791 billion yuan in 2023 to 2.193 billion yuan in 2025, with 0%/7.9%/13.5% growth rates [9][166] - Net profit is projected to increase from 737 million yuan in 2023 to 875 million yuan in 2025, with 1.0%/10.7%/7.3% growth rates [9][166] - The company is valued at 10.9 billion yuan based on 13x 2024E PE, implying a target price of 5.8 yuan [9]