Energy-saving wind power fundamentals learning and trading point discussion and analysis
Energy Conservation Wind Power is a company that focuses solely on wind power generation, and the conclusions of the 2022 annual report and fundamental analysis still apply, and it has been another year to see how the company's fundamentals have changed.
In 2023, the company's net profit will be 1.51 billion yuan, the dividend will be 540 million yuan, the dividend rate will be 36%, the current market value will be 19.5 billion yuan, and the dividend yield will be 2.7%.
In 2023, the company's main operating indicators in the past five years are as follows:
Revenue increases with the increase in installed capacity, in the past two years in a relatively stable number of installed capacity, net profit is OK, annual power generation utilization hours are also steadily increasing, in fact, this is all dependent on the sky, human factors account for a small proportion, just in the early stage of the selection of the site when a little cautious can be.
In 2023, the capital expenditure situation is as follows:
In 2023, the construction in progress will be about 2.3 billion yuan, and the fixed assets will be 580 million yuan, of which 1.865 billion yuan will be invested this year, which will be calculated according to the proportion of 20% of the self-financing principal, and the cash flow of the company will be 370 million yuan, with a total of 123,700 kilowatts put into operation.
In 2024, the company's projects under construction will continue to be constructed, and according to the budget of 8.28 billion yuan for the projects under construction, it is estimated that about 1.6 billion yuan of capital (cash flow) will be invested, which will flow out year by year, and be counted as a cost first.
By the end of 2023, the company's total promising installed capacity will be 8 million kilowatts, of which 5.35 million kilowatts are in operation, and a 50% increase in the follow-up reserve force can be expected, corresponding to the current power generation, which is also expected to increase by 50%+, because the current technology is slightly better than before, and the power generation will also be increased.
Among these core indicators, approximate cash flow is the most important, as can be seen from the above table, since the cash flow turned positive in 2022, this year's free cash flow continues to be positive, with the basis of 70% net profit dividends, and at the same time, a little bit of last year's revenue can know something:
The revenue was 5.1 billion yuan, the operating cost was 2.4 billion yuan (including depreciation of 1.8 billion yuan), the gross profit was 2.7 billion yuan, after deducting the financial cost of 750 million yuan and the management cost of 180 million yuan, after deducting the business tax and research and development expenses, the investment income and other income were a total of 150 million yuan, and the total operating profit was about 1.8 billion yuan, and then the net profit was about 1.5 billion yuan after the enterprise income tax of 230 million yuan (the tax rate was about 13%).
From the above, it can also be confirmed that the net cash flow generated by the operation is the net profit plus depreciation of 3.3 billion yuan, minus the 2.2 billion yuan generated by the purchase of fixed assets, then the net discretionary cash flow is about 1.1 billion yuan, which is the operating performance of energy-saving wind power this year and the core data we need to pay attention to, other data are also important, but not so important.
Based on the above analysis, we make the following rough summary of energy-saving wind power, the company has slowed down the speed of expansion, and at the same time, due to the industry's heavy assets and high leverage, the financial expenses are too much, a bit similar to the nature of real estate, but the company can continue to generate cash flow in the life cycle, and in some stages can also generate net cash flow (such as energy-saving wind power at this moment), but I don't know whether the net cash flow generated in the life cycle can make up for the investment principal and income.
Generally speaking, the life of a wind turbine is 20 to 25 years, according to the annual depreciation rate of 6.4%, the residual value of 5% to calculate, the depreciation period of a wind turbine is about 11 years, there is still about 9-14 years left to generate net profit, gross estimate, the approximate yield should be about 8%.
For the future of the company, the company's growth rate has slowed down, the expansion has slowed down, and the increase in future earnings mainly depends on the increase in the dividend rate, which is now 36%, far lower than expected.
The cumulative rate of return on dividends depends on the amount of dividends, in fact, the company's average annual rate of return is not low, if the dividends are more timely, even if they do not grow, they can reach 10%, but if they maintain the current 36% dividend, the current yield is still low, and then look at other companies to make a comparison.
Using another method, continue to analyze the company, the company's installed capacity is 5.35 million kilowatts, the market value is 19.5 billion yuan, the company's asset-liability ratio is 58%, if you take out 19.5 billion yuan to acquire the company, you can get a net asset of 17.5 billion yuan of wind turbines and equipment, and get a debt of 24.5 billion yuan, of which interest-bearing liabilities are 14.4 billion yuan, other liabilities are 10 billion yuan, a total of 42 billion yuan of total assets.
The replacement cost of the company's wind turbines is 7,850 yuan/kW, of which 58% is a loan, which is a 22% discount more than the general 20% of the capital project, and some wind turbine equipment also has about 4 years of depreciation costs and some financial expenses, and the market value can also be used to calculate the cost of purchasing assets of 2.7 kW/10,000 yuan.
If we invest 10,000 yuan, we can get about 2.7 kilowatts of ownership of the company's assets (assuming that the debt ratio remains the same, in fact, it changes every year), and if the company does not build new wind farms and no longer invests, let's calculate this rate of return.
We purchased 2.7 kilowatts of wind turbine assets (the asset-liability ratio is 60%, and the total liability of 2.7 kilowatt wind turbine assets is 12,300 yuan) before the investment of 10,000 yuan at the end of 2023, and the main data generated are as above, and the operating income can be about 2,600 yuan, the book net profit is 762 yuan, the loan interest is 382 yuan, and the depreciation expense of fixed assets is 91.4 billion yuan.
If we don't invest in new projects, we will get an annual cash flow of 762 yuan plus 914 yuan to about 1,670 yuan, which is about 64% of revenue.
If 50% of these free cash flows are divided, and the remaining 50% is paid interest on bank loans, we get the following table over the life cycle (15 years, conservatively):
There are three assumptions in the above table, that is, the revenue is stable (the electricity price is put aside from the on-grid bidding and electricity fluctuations), the bank interest rate is stable at the funding rate level of 3.09% in 2023, and the free cash flow is 50% of the principal repayment and no new capital expenditure, so that the calculation is the approximate appearance of a wind farm after it is put into operation.
Let's dig deeper, so let's do it in the table below
Invest 10,000 yuan to buy 2.7 kilowatts of wind power assets with a debt ratio of 60%, and under the condition that the electricity price and electricity are fixed, the net cash flow in 15 years can be about 24,000 yuan, and the net profit in the statement is 11,700 yuan.
To buy stocks is to buy a company, to buy a company is to buy the company's future cash flow, the future cash flow also needs to be discounted, in my simple investment philosophy, and not counting the discount rate, invest 10,000 yuan in assets to get 24,000 yuan of cash flow within 15 years, 7 years to recover the cost of 10,000 yuan. The compound annual rate of return is 6%.
As for whether these wind turbines will continue to be used after maintenance or renew the wind turbines to start a new round of investment or continue to use them after 15 years of use, it is up to different opinions, and these data are still in the later period of continuous collection and calculation.
The above data is just a small model in their own learning, many factors have not been taken into account, including the most influential is the discount rate, in fact, the first priority of investment is to protect the capital, the second priority is to make money, it is currently in the first stage, and then slowly learn it, for the analysis of the annual report of this kind of company, the most concerned indicator has changed from net profit to cash flow and cash flow distribution, which is also quite interesting an idea, for companies with rapid growth in net profit and cash flow, it is another analysis template.