20160420-光大证券_香港_-中广核新能源-01811.HK-Birth_of_New_Star_17页_322kb

报告摘要

CGN New Energy (1811 HK) Summary

Core Content

CGN New Energy (1811 HK) is a subsidiary of China General Nuclear Power Corporation (CGN), which has positioned it as the "sole global platform in non-nuclear clean and renewable energy". The company was originally established in 1995 as a subsidiary of Public Service Enterprise Group Inc and later fully acquired by CGN in 2010, with a listing on the Hong Kong Stock Exchange (HKEx) in 2014 and a renaming to CGN New Energy in 2015.

Main Points

Parent's Support: CGN has been actively supporting CGN New Energy through asset injections, aiming to expand its non-nuclear alternative energy business.
Asset Injections: In 2015, CGN New Energy acquired 16 wind farm projects and 6 solar farm projects from CGN, increasing its total installed power capacity to 5,065MW. It targets to acquire an additional 1.6-3.6GW of non-nuclear alternative energy projects by the end of 2018.
Revenue Mix: The acquisition significantly shifted the revenue mix, with wind and solar power expected to account for a growing share of total revenue and operating profit. Wind and solar are projected to contribute 9.9% and 6.8% of total revenue in 2016, rising to 10.1% and 7.0% in 2017.
Valuation: The company is currently trading at a FY16 P/E of 6.0x, below the average of its wind and solar power peers. The target price is set at HK$1.48, based on a DCF model, representing a 6.5x FY16 P/E and an 8.8% upside.
Financials: Net profit growth is expected to be sluggish due to high finance costs and reduced utilization hours for gas-fired power plants in Korea. The company's net debt-to-equity ratio is high, at 255.5% as of FY16E.

Key Information

Financial Highlights (2014–2018E)

Metric	2014	2015	2016E	2017E	2018E
Turnover (US$m)	1,380	1,152	1,064	1,011	1,072
Growth (%)	30.8	-16.5	-7.6	-5.0	6.0
Net Profit (US$m)	202	104	125	108	101
Growth (%)	262.3	-48.6	20.4	-13.7	-6.6
EPS (US$)	0.06	0.02	0.03	0.03	0.02
Growth (%)	N/A	-59.5	20.4	-13.7	-6.6
PER (x)	2.9	7.2	6.0	7.0	7.4
OCF/Share (US$)	0.05	0.04	-0.02	0.04	0.01
P/B (x)	1.06	1.01	0.95	0.98	1.02
EV/EBITDA (x)	16.5	21.5	18.7	19.4	19.2
DPS (US$)	0.00	0.00	0.01	0.01	0.01
Yield (%)	0.00	2.52	2.86	2.86	2.86

Shareholding Structure

CGN: 72.3%

Investment Summary

Accumulate Rating: Initiated with a target price of HK$1.48.
Upside: 8.8% (as of 19 April 2016).
52 Week Price Range: 0.98–3.6 HK$.
12M Daily Turnover: 23.93 HK$ million.
12M Volatility: 58.2%.
RoE FY16E: 16.4%.
Net Debt/Equity FY16E: 255.5%.

Risks

Power Utilization Hours: A significant decrease in utilization hours for wind and solar power in China due to power rationing.
Finance Costs: High finance costs due to high net gearing and potential interest rate hikes.
Utilization Hours in Korea: Sharp decrease in utilization hours for gas-fired and oil-fired power plants due to the expansion of nuclear power usage.
Currency Risk: Operations in both China and Korea expose the company to currency fluctuations.

Strategic Implications

Revenue Mix Change: The shift towards wind and solar power will enhance the company's profile as a clean energy player.
Future Acquisitions: Further asset injections from CGN are expected to increase the company's clean energy capacity, but could be dilutive if priced at market levels.
Operational Shift: The company is transitioning from traditional fossil fuel-based energy generation to clean and renewable energy.

SWOT Analysis

Strengths: Strong parent support, strategic restructuring, and expansion into clean energy.
Weaknesses: High net gearing, potential for high finance costs, and reliance on market pricing for future acquisitions.
Opportunities: Growth in the renewable energy sector, expansion in China and Korea.
Threats: Power rationing in China, nuclear power expansion in Korea, currency risk.

Financial Analysis

Operating Margin: Wind and solar power have higher operating margins than traditional energy sources.
DCF Valuation: The target price is based on DCF analysis, indicating a potential value of HK$1.48.
Sensitivity Analysis: Equity value per share is sensitive to changes in WACC and terminal growth rates, with values ranging from 0.90 to 1.64 HK$ under different assumptions.

Peer Comparison

Company	Ticker	Price (HK$)	Mkt Cap (HK$m)	P/E (x)	P/B (x)	Yield (%)	Net Debt/Equity (%)
Concord New Energy Group	182 HK	0.425	3,713	11.7	0.65	0.0	20.4
China Ruifeng Renewable	527 HK	0.67	1,205	N/A	2.02	0.0	274.8
Beijing Jingneng Clean	579 HK	2.58	17,726	11.7	1.12	2.0	186.1
China High Speed Transmis-	658 HK	6.3	10,302	41.3	0.93	0.0	96.0
Huadian Fuxin Energy	816 HK	1.96	16,480	7.0	0.87	2.7	279.1
China Longyuan Power	916 HK	5.9	47,415	13.7	1.12	1.5	162.8
China Suntien Green	956 HK	0.87	3,232	8.0	0.36	4.3	88.5
Huaneng Renewables	958 HK	2.45	23,834	10.7	1.12	1.5	254.6
China Datang Corp Renewabl-	1798 HK	0.92	6,692	N/A	0.61	0.0	286.0
Xinjiang Goldwind Sci&Tec-H	2208 HK	11.66	49,729	9.3	1.59	4.9	64.3
CGN New Energy	1811 HK	1.36	5,836	7.2	1.01	2.5	224.1

Appendix

Corporate Development Timeline

Year	Major Event
1995	Establishment in Bermuda as an indirect subsidiary for Asian energy projects
2000	Acquisition by CGN as an indirect subsidiary
2014	Listing on the HKEx on 25 Sep 2013
2015	Completion of first asset acquisition and renaming to CGN New Energy

Top Management

Name	Age	Title	Major Responsibilities	Background
Mr. Chen Sui	51	Chairman	Overall corporate strategies and business development	27 years of experience in renewable energy, engineering background
Mr. Lin Jian	52	President	Overall corporate affairs and representation in Korea	Engineering background in industrial automation and electronic precision machinery

Conclusion

CGN New Energy is undergoing a strategic shift towards non-nuclear clean energy, supported by its parent CGN. While the company's asset injections are expected to boost its renewable energy profile, it faces challenges such as high finance costs and potential reductions in power utilization hours due to market dynamics in both China and Korea. The investment recommendation is an Accumulate rating with a target price of HK$1.48, highlighting the potential for growth despite these risks.

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