2019年 摩根士丹利-中国城市化2.0：大湾区向低碳能源转型的受益者们-2019.10.13-97页

M Chinas Urbanization 2.0 Beneficiaries of the Greater Bay Areas Transition to Low- Carbon Energy Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report. Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Nuclear is the best option for GBAs transition to low carbon. We double upgrade CGN Power to OW and upgrade HKEI to OW. October 13, 2019 1043 PM GMT M MORGAN STANLEY ASIA LIMITED Simon H.Y. Lee, CFA Equity Analyst 852 2848-1985 Simon.Leemorganstanley.com Contributors MORGAN STANLEY ASIA LIMITED Beryl Wang Research Associate 852 3963-3643 Beryl.Wangmorganstanley.com MORGAN STANLEY ASIA LIMITED Yishu Yan Research Associate 852 3963-2846 Yishu.Yanmorganstanley.com MORGAN STANLEY ASIA LIMITED Eva Hou Equity Analyst 852 2848-6964 Eva.Houmorganstanley.com M Chinas Urbanization 2.0 Beneficiaries of the Greater Bay Areas Transition to Low- Carbon Energy Nuclear is the best option for GBAs transition to low carbon. We double upgrade CGN Power to OW and upgrade HKEI to OW. Nuclear renaissance from 2020 We expect acceleration of nuclear approvals upon commissioning of Chinas first Hualong One unit. Nuclear is competitive with coal under new market structure, and will replace coal to become the core baseload power source. CGN Power will be the key beneficiary. Hydropower from Yunnan and Tibet from 2025 West to East Power supplied 36.2 of Guangdongs power demand in 2018. We expect 10-20GW of additional power to Guangdong by 2030, pri- marily supplied by China Yangtze Powers Wudongde 5GW and Huaneng Hydros planned 10GW of Tibetan hydropower. Hong Kong to import from Guangdong Hong Kongs target of decarbonization by 2050 requires 80 clean energy, vs. local resources of 3-4. Import nuclear from Guangdong is the only viable option. We expect CLP to import more from 2025 and HKEI to con- nect with Guangdong via undersea power lines. Upgrade CGN Power and HK Electric Investments to OW For CGN Power, we see acceleration of approvals based on Hualong One and rising dividends with its strong FCF. HKEI offers the highest yield among HK utilities and regulated asset growth from undersea con- nection with Guangdong nuclear plants. Maintain OW on China Yangtze Power and EW on Huaneng Hydro CYPC may have dividend growth upside from 2021 based on a 70 payout ratio. Huaneng Hydros capex on 10GW capacity in Tibet could delay dividend upside. Resume coverage of CKI and PAH at EW We see rising near-term FX volatility in GBP ahead of Brexit, with regulatory resets in UK and Australian assets cutting related earnings by 10. CKIs three acqui- sitions in 2017 generated 5 ROE, lower than expected. Industry View China Utilities Attractive GBA will be Chinas leading region in carbon reduction and air quality The Paris Agreement, air pollution and energy efficiency pressure, and GBAs power tariff affordability – the highest in China – all point to GBA becoming Chinas leader in its decarbonization strategy. We expect clean energy to be 80 of GBAs installed capacity by 2035, far ahead of Chinas average of 65. GBAs plan to reduce coal GBA has 32GW of coal power capacity today and plans a 31 reduction by 2035, to 22GW. Excluding coal, nuclear and imported hydropower are the most competitive energy sources vs. gas and offshore wind. We expect increases of 180 in nuclear and 50 in hydropower imports. WHAT’S CHANGED From To HK Electric Investments 2638.HK Price Target HK7.00 HK8.60 Rating Equal-weight Overweight CK Infrastructure Holdings Ltd 1038.HK Rating NA Equal-weight Price Target NA HK54.00 Power Assets Holdings Ltd 0006.HK Price Target NA Equal-weight Rating NA HK57.00 CGN Power Co., Ltd 1816.HK Rating Underweight Overweight Price Target HK1.80 HK2.52 China Yangtze Power Co. 600900.SS Price Target Rmb18.00 Rmb20.00 HuanengLancang River Hydropower Inc 600025.SS Price Target Rmb4.39 Rmb4.50 M 4 Contents 5 The Fundamental Backdrop 6 Key Conclusions 8 Summary of Stock Ideas 14 China Guangdong GBA Action Plan 2018-2020 and China Southern Grid Power Industry Planning to 2035 23 Nuclear – Long-awaited Renaissance from 2020 25 Hydropower – Goes Further West from Yunnan to Tibet 27 Cutting Coal and Replacing It with Gas and Offshore Wind – Expensive Options Unlikely to Replace Baseload Demand 32 Hong Kong The Path to Decarbonization 37 Electricity Generators in Hong Kong – CLP Holdings and HK Electric Investments 41 CGN Power – Double Upgrade to OW from UW 47 CGN Power – Changes in Key Assumptions and Earnings Estimates 49 CGN Power – Valuation Methodology 51 CGN Power – Financial Summary 52 Huaneng Hydro – Maintain EW Rating 55 Huaneng Hydro – Changes in Key Assumptions and Earnings Estimates 58 Huaneng Hydro – Valuation Methodology 60 Huaneng Hydro – Financial Summary 61 China Yangtze Power Company – Maintain OW Rating 63 China Yangtze Power Company – Financials and Earnings Estimates 65 China Yangtze Power Company – Valuation Methodology 67 China Yangtze Power – Financial Summary 68 CLP Holdings – Maintain EW Rating 69 CLP Holdings – Changes in Earnings Estimates 70 CLP Holdings – Valuation Methodology 72 CLP Holdings – Financial Summary 73 HK Electric Investment – Upgrade to OW from EW 74 HK Electric Investments – Changes in Earnings Estimates 75 HK Electric Investments – Valuation Methodology 77 HK Electric Investments – Financial Summary 78 CK Infrastructure Holdings and Power Assets Holdings – Resuming Coverage at EW 82 CKI and PAH – Changes in Earnings Estimates 83 CKI and PAH – Valuation Methodology 87 CK Infrastructure Holdings – Financial Summary 88 Power Assets Holdings – Financial Summary 89 Appendix 1 Power Exports from Western to Eastern China 90 Appendix 2 Guangdong Power Exchange and Market Power Sales M MORGAN STANLEY RESEARCH 5 Greater Bay Area GBA development plan – energy section China aims for the Greater Bay Area 1 to become an international first-class bay area for living, working, and traveling, with an emphasis on a green, low-carbon, and sustainable ecological system. We believe GBAs power system, which accounts for 50 of emissions, is essential for GBA to increase green energy utilization, improve air quality, and promote a low-carbon lifestyle. Why GBA will be Chinas leading region in air quality and carbon reduction We believe GBA has the potential to lead Chinas various regions in air quality, green power utilization, and carbon reduction, in order to support its ambitious aim to become one of the most liv- able bay areas in the world. 1. Aggressive target Guangdong announced a ban on new coal power plants in 2018. It raised its 2020 gas utilization plan and approved 10GW of additional gas IPP capacity. 2. Already the leader In 2018, the Pearl River Delta had the lowest PM2.5 emissions among regions in China and the highest utilization of clean energy. Shenzhen is the first Chinese city to set an air quality target by 2030 in line with the United Nations benchmark. 3. Availability of resources With its ports and coastal areas, GBA has the best access to imported fuel LNG and offshore gas fields in the South China Sea. GBA also has the highest proportion of imported clean energy among regions in China, thanks to proximity to Southwest China Yunnan and future access to Tibetan hydropower. GBA also has the best access to offshore wind on the Guangdong coastline and the highest penetration of nuclear power, as home to Chinas first com- mercial nuclear station. 4. Affordability Guangdong and Shenzhen are the province and city with the highest end user power tariffs in China. Power tariffs in HK were 23 higher than in Shenzhen in 2017. GBAs high power tariff affordability should allow higher utilization of green energy, including nuclear, imported hydro, gas, and offshore wind. 1The Greater Bay Area refers to the Chinese governments plan – first raised in 2009 – to link the cities of Hong Kong, Macau, Guangzhou, Shenzhen, Zhuhai, Zhongshan, Foshan, Dongguan, Jiangmen, Huizhou, and Zhaoqing into an integrated economic and business hub. The Fundamental Backdrop Requirements under the Paris Agreement for China and Hong Kong – and why timing is imminent Under the Paris Agreement of 2015, all countries need to draw up their own mid-century 2050 long-term development strategy for low greenhouse gas emissions by 2020, with a view to holding the increase in global temperature below two degrees. China and the Hong Kong Special Administrative Region as part of China will have to present their own decarboniza- tion strategies in 2020 countries to submit updated climate pledges. We expect both China and Hong Kong will need to finalize their public consultation process and related strategies before the end of 2019/early 2020. GBAs progress on air quality/carbon reduction China officially announced Greater Bay Area planning in February 2019, while Guangdong announced its 2018-2020 GBA Action Plan in July 2019. China Southern Power Grid CSPG has initiated long-term power planning and analysis for GBA and published a report in June 2019. By 2020, GBA aims for PM2.5 of Rmb665/MWh makes it more suit- able for peaking instead of baseload. Plus, gas power also emits 50 of the carbon that coal power does. l Biomass is small. Guangdong is not focused on agriculture. l Guangdongs onshore wind and solar resources rank in the bottom quartile among provinces in China. l Imported hydropower from Yunnan is competitive but resources are exhausted, and future hydropower from Tibet will cost Rmb600/MWh. l Offshore wind is available in Guangdong, but we think its high Rmb800-850/MWh tariff and intermittent nature make this form of renewable energy less common in GBA vs. other regions. Exhibit 3 Guangdong Power tariffs Power Source Rmb/kWh Nuclear GII 0.430 Nuclear GIII 0.435 Hydropower Yunnan 0.390 Hydropower Tibet 0.600 Gas Guangdong 0.700 Wind Onshore 0.520 Wind Offshore 0.850 Source NDRC, Morgan Stanley Research M MORGAN STANLEY RESEARCH 7 Why Hong Kong needs to connect power with GBA/Guangdong Under the Paris Agreement, Hong Kong has to reduce per capita carbon emissions from 5.7 tonnes to at least 2 tonnes. The HK govern- ments report suggests that by 2050, 80 of Hong Kongs power needs to come from clean energy gas excluded because it emits 50 of the carbon that coal does – and wind, solar, and biomass can supply only 3-4 of power demand. Hong Kong does not have hydropower or nuclear, so we believe imports from Guangdong/GBA are the only viable option. CLP is already connected with Guangdong, and with its interconnection to be upgraded probably by 2025, we project that CLP will increase nuclear power imports from 1.85GW to 2.35GW and advance HKs 2030 carbon target by five years. We expect HKEI to build an undersea power line with Shenzhen, potentially with CSG and/or Ling Ao nuclear power plants after 2030. Exhibit 4 Hong Kong Illustration of Paris Agreement Source CLP Holdings, Morgan Stanley Research M 8 Exhibit 5 Summary Order of preference CGN Power H HK Electric Investments H China Yangtze Power Company A Huaneng Lancang River Hydropower A CLP Holdings H Power Assets Holdings H CK Infrastructure Holdings H 1816.HK 2638.HK 600900.SS 600025.SS 0002.HK 0006.HK 1038.HK Rating OW OW OW EW EW EW EW Trading Currency HKD HKD CNY CNY HKD HKD HKD Price Target 2.52 8.60 20.00 4.50 85.00 57.00 54.00 Closing Price as of 9 Oct 2019 1.93 7.34 18.47 4.40 79.60 52.50 52.60 Upside/Downside 31 17 8 2 7 9 3 Market Cap in USD mm 12,683.2 8,347.7 57,027.1 11,429.7 26,058.2 14,693.5 17,141.7 Avg Daily Traded Vol in USD mm 8.6 4.5 49.9 20.2 35.7 24.8 14.0 Valuation Multiples at Last Close FY19e P/B 0.9x 1.4x 2.7x 1.7x 1.9x 1.3x 1.1x P/E 8.3x 26.2x 17.9x 16.0x 18.7x 16.1x 14.4x EV/EBIT 14.7x 27.7x 15.7x 16.5x 15.8x 16.0x 14.9x EV/EBITDA 9.9x 15.2x 11.6x 10.4x 9.9x 14.6x 14.4x EV/Sales 4.9x 10.5x 9.2x 8.8x 3.0x 71.8x 23.5x FCF Yield 7.1 -1.1 8.4 16.5 4.7 5.8 8.8 Dividend Yield 4.8 4.4 3.7 3.1 3.9 5.3 4.7 FY20e P/B 0.8x 1.4x 2.6x 1.6x 1.8x 1.3x 1.0x P/E 7.9x 24.8x 17.1x 16.5x 18.0x 16.6x 14.1x EV/EBIT 13.6x 27.0x 15.5x 17.1x 14.8x 16.4x 14.4x EV/EBITDA 9.4x 14.8x 11.3x 10.3x 9.4x 15.1x 13.9x EV/Sales 4.4x 10.4x 9.0x 8.5x 2.8x 73.4x 23.0x FCF Yield 11.0 -0.5 7.8 8.9 1.2 5.0 6.9 Dividend Yield 5.0 4.4 3.7 3.0 4.1 5.3 4.8 Implied Multiples on MS Price Target FY19e P/B 1.1x 1.6x 2.9x 1.7x 2.0x 1.4x 1.1x P/E 10.8x 30.7x 19.4x 16.4x 20.0x 17.5x 14.7x EV/EBIT 16.0x 30.3x 16.8x 16.5x 16.5x 16.9x 14.9x EV/EBITDA 10.7x 16.8x 12.0x 10.9x 11.2x 16.9x 14.8x EV/Sales 5.4x 11.5x 9.9x 8.8x 3.2x 75.8x 23.5x Dividend Yield 3.7 3.7 3.4 3.1 3.7 4.9 4.6 FY20e P/B 1.1x 1.6x 2.8x 1.6x 2.0x 1.4x 1.1x P/E 10.4x 29.1x 18.5x 16.9x 19.2x 18.0x 14.5x EV/EBIT 14.8x 29.5x 16.6x 17.1x 15.5x 17.4x 14.4x EV/EBITDA 10.2x 16.3x 11.7x 10.9x 10.6x 17.4x 14.3x EV/Sales 4.8x 11.4x 9.7x 8.5x 2.8x 73.4x 23.1x Dividend Yield 3.9 3.7 3.4 3.0 3.8 4.9 4.7 Stock Price Performance 1 Month 4.4 2.5 1.5 0.4 0.2 2.0 0.2 3 Month 10.9 7.7 0.7 6.1 7.9 6.9 15.6 1 Year 10.1 2.0 19.5 77.2 8.1 1.3 11.2 YTD 5.9 6.2 15.7 42.9 8.6 0.9 9.2 Source Refinitiv, Morgan Stanley Research estimates Summary of Stock Ideas M MORGAN STANLEY RESEARCH 9 We double upgrade CGN Power to OW from UW We had an Underweight rating on CGN Power since June 2016 in view of concern about delay in Taishan. Taishan units I/II were supposed to be put into operation in 2017, but this actually took place in 2018/2019, increasing hydropower imports, and nuclear power tar- iffs have not been competitive vs. coal power tariffs. We believe all the risk factors have played out l All Taishan units are connected to grids and Taishan tariffs have been approved. l Hydropower imports accelerated in 1H19; but nearly reached their peak as almost all Yunnan hydropower capacities were commis- sioned. l Guangdongs aggressive plan to shut down coal power plants means that nuclear power tariffs should be benchmarked to incre- mental new power sources gas, imported hydro, and offshore wind instead of coal. l Guangdongs potential new market mechanism