Fangzheng Securities: State Power Investment Corporation's reform enters deep water, seizing the dividends of asset securitization

According to the Zhitong Finance APP, Founder Securities released a research report stating that, benchmarking the market performance after the asset restructuring project of State Power Investment Corporation, the bank believes that the expectation of asset securitization has a significant uplifting effect on stock prices. Considering that several listed companies within the group, such as SPICYD (600292.SH), IMDTECL (002128.SZ), and JEP (000875.SZ), still have expectations for asset injection or mergers and acquisitions, the bank believes that the corresponding market value of the aforementioned companies still has considerable room for improvement, which is expected to drive stock prices further upward in the future.

The main points of Founder Securities are as follows:

State Power Investment Corporation plans to restructure assets of its subsidiaries

Among them, listed companies such as Shanghai Electric Power, IMDTECL, and SPICYD all have asset restructuring plans. The bank has sorted out the assets of State Power Investment Corporation and looks forward to the future space for asset restructuring. As of the end of 2024, State Power Investment Corporation has a thermal power installed capacity of 83.53 million kilowatts, hydropower installed capacity of 26.58 million kilowatts, and is actively laying out nuclear power, as well as wind and solar installations, with a power asset securitization ratio of approximately 51.4%. In addition to power assets, the group is also making large-scale layouts in the aluminum industry chain, including bauxite, alumina, and electrolytic aluminum. By the end of 2024, it will have bauxite production capacity of 11.2 million tons, alumina of 3.9 million tons, and electrolytic aluminum of 4.3 million tons.

The group's asset securitization is accelerating, and the value of the listed platform is about to be reshaped

From the perspective of capital operation paths, State Power Investment Corporation has undergone several rounds of large-scale strategic mergers and reorganizations since its establishment, showing a clear path from horizontal mergers and reorganizations to the overall listing of financial assets, and then to the specialized business spin-off and integration. In May 2015, China Power Investment Corporation and State Nuclear Power Technology Corporation conducted their first significant merger and reorganization since their establishment, effectively promoting the improvement of China's third-generation nuclear power independent technology industrial chain. Starting in 2019, the group officially launched the Huanghe project to increase capital and introduce strategic investors to improve operational efficiency in the clean energy business; in the same year, the group's subsidiary Dongfang Energy injected financial assets and was renamed IMDTECL in 2022, achieving the listing of part of the group's financial assets.

The group's asset space is vast, and overseas assets in water, nuclear, and aluminum are still expected to be further restructured and injected

On September 30, 2024, the listed companies under State Power Investment Corporation, IMDTECL and SPICYD, successively announced plans for major asset restructuring. The former is expected to achieve the divestment of financial assets and the injection of nuclear power assets, while the latter will transform into a hydropower asset integration platform to promote further securitization of nuclear and hydropower.

Even if the group intends to inject some nuclear power and hydropower assets into IMDTECL and SPICYD, the bank believes that State Power Investment Corporation still has a large number of unlisted assets in water, nuclear, aluminum, hydrogen, and other areas, indicating a broad long-term space for asset securitization in the future. Among them, a large number of hydropower assets of the group are located in Huanghe Company, and combined with the gradual injection of hydropower assets from SPICYD, the bank speculates that this platform may become the injection platform for the group's core hydropower assets. In addition, the group has formed a relatively complete aluminum industry chain, but currently only a small portion of electrolytic aluminum assets are located in the listed company IMDTECL. Considering that IMDTECL announced in May this year its intention to acquire 100% equity of Baiyin Hwa Coal Power, which has some electrolytic aluminum production capacity, the bank speculates that if the group continues to promote mergers and reorganizations of aluminum assets, IMDTECL is expected to become the relevant asset integration platform At the same time, the listed companies under the group, such as JEP and Shanghai Electric Power, have recently undergone name changes. Combined with the group's positioning, the bank speculates that they will respectively become the main platforms for the group's new energy assets and overseas asset injections.

Investment Recommendations

It is recommended to pay attention to IMDTECL (stable profits from coal, electricity, and aluminum integration, expected to become the group's aluminum integration platform), IMDTECL Production and Finance (expected to transform into a nuclear power operation platform in the future), SPICYD (domestic hydropower asset integration platform, with unlisted hydropower assets expected to be injected), Shanghai Electric Power (responsible for the group's international platform construction tasks, expected to become the integration platform for overseas assets), and JEP (expected to become the group's new energy asset integration platform).

Risk Warning: Risks of electricity demand not meeting expectations; risks of water inflow not meeting expectations; risks of declining on-grid electricity prices; risks of asset injection not meeting expectations; risks of tightening energy consumption and environmental protection policies; risks of construction project production progress not meeting expectations