Yin Xing Energy(000862) 华源证券·2024-05-17 10:00Investment Rating - The report initiates coverage on Yinying Energy with an "Outperform" rating, reflecting its position as the sole green energy listed platform under Chinalco Group [4][5] Core Views - Yinying Energy is positioned as the exclusive green energy listed platform under Chinalco Group, with a strategic focus on expanding from Ningxia to nationwide [4][17] - The company benefits from the "replace old with new" initiative for aging wind farms, which is expected to enhance its operational efficiency and profitability [4][31] - Backed by Chinalco Group, Yinying Energy has significant potential in the "source-grid-load-storage" (SGLS) integration, leveraging its parent company's extensive industrial load and energy needs [31][44] Summary by Sections 1. Chinalco's Sole Green Energy Listed Platform - Yinying Energy is the only listed platform for green energy under Chinalco Group, with a controlling stake of 41.23% held by Chinalco Ningxia Energy Group [4][17] - As of 2023, the company has a total installed capacity of 1.92 GW, all from renewable energy sources, including 1.61 GW of wind power and 0.31 GW of photovoltaic (PV) capacity, primarily located in Ningxia, Inner Mongolia, and Shaanxi [4][17] - The company's wind power capacity accounts for approximately 10% of Ningxia's total wind power capacity [17] 2. Ningxia's Aging Wind Farms and Chinalco's SGLS Strategy - Ningxia, one of China's earliest provinces to develop wind power, faces a pressing need to upgrade its aging wind farms. The "replace old with new" initiative aims to update over 2 GW of capacity by 2025 [31][37] - Yinying Energy, as the first wind power operator in Ningxia, holds a significant share of high-quality wind resources, with approximately 70% of its existing wind capacity eligible for the "replace old with new" program [31][39] - The company's internal rate of return (IRR) for these projects is estimated at 10%, significantly higher than its current ROE [31] - Chinalco Group, as the world's largest electrolytic aluminum producer, faces urgent decarbonization needs under China's dual-carbon strategy. The group plans to develop new energy projects through SGLS integration, with Yinying Energy expected to play a central role [31][44] 3. Financial Projections and Valuation - The report forecasts Yinying Energy's net profit attributable to shareholders to reach RMB 251 million, RMB 312 million, and RMB 388 million for 2024-2026, respectively, with corresponding P/E ratios of 19x, 16x, and 13x [5][32] - Key assumptions include an increase in wind power utilization hours to 1,800, 2,000, and 2,100 hours for 2024-2026, and PV capacity additions of 200 MW, 500 MW, and 1,000 MW for the same period [32][50] - The company's valuation is supported by its strategic position within Chinalco Group and the potential for growth through the "replace old with new" initiative and SGLS projects [51] 4. Industry Context and Competitive Landscape - The renewable energy sector in Ningxia is expected to see significant growth, with total renewable energy capacity projected to exceed 50 GW by 2025, up from 36.43 GW in 2023 [37] - Yinying Energy's peers, such as China Three Gorges Renewables, Southern Power Grid Energy Efficiency & Clean Energy, and JZ Energy, have an average P/E ratio of 21x for 2024, compared to Yinying Energy's 19x [5][54] - The company's strategic initiatives and backing from Chinalco Group position it favorably within the competitive landscape of renewable energy operators [31][44]