Strong yoy growth in contract wins in the
China Southern Grid tender
? China Southern Grid posted its tender results (link) on its website on 7 Jun
2022.
? Wasion (both Wasion and Wilfar) secured an Rmb191.5m contract in China
Southern Grid’s latest central tender in 2022, which represents a yoy
increase of about 86%. This is in line with our view that power grid demand
will report good growth in 2022.
? The results of the tenders of both State Grid and China Southern Grid will
support Wasion’s growth in 2022 despite macro uncertainties.
? We reiterate the view that Wasion is a laggard in the power investment theme;
it is trading at low valuation and has a high dividend yield.
? We reiterate our positive view on Wasion. The latest tender results may boost
sentiment on Wasion, which may play catch-up. Reiterate ADD with a target
price of HK$4.23.
Strong yoy growth in China Southern Grid’s procurement plan.
? China Southern Grid posted its tender results on its website on 7 Jun 2022. According
the release, Wasion (both Wasion and Wilfar) secured an Rmb191.5m contract in China
Southern Grid’s latest central tender in 2022, which represents a yoy increase of about
86% vs. Rmb103m in 1H21. This was the first round of central bidding relating to the
procurement plan in 2022, and based on our understanding, Wasion ranked first in terms
of contract value in this tender. This is in line with our view that power grid demand will
report good growth in 2022, given the government’s pro-growth policy and investment
in the digital economy. As we discussed earlier, in addition to the tender launches
(related to the procurement plan in 2021) in early 2022, Wasion won contracts with an
accumulated value of approximately Rmb805.7m in the State Grid’s centralized bidding
in 2022 (1H22), an increase of 72.6% yoy from Rmb466.83m in 1H21. Wasion is one of
the beneficiaries of the industry trend in 2022, and the results of the tenders of both
State Grid and China Southern Grid will support Wasion’s growth in 2022 despite macro
uncertainties.
Indirect beneficiary of renewable energy investment
? We maintain the view that Wasion, as a total solutions provider, will capture the growth
potential from the development of new energy projects through cooperation with China
Power. We believe that Wasion Holdings will leverage China Power’s resources
(financial and pipelines) and grow with the huge CAPEX outlay. This will also help
Wasion shorten the learning curve and development time.
Reiterating our positive view on Wasion
? We maintain the view that apart from a sector rerating, company-specific catalysts
include more disclosure about its roadmap and achievements in areas such as the
Internet of Energy, energy storage, carbon emissions reduction goals, and new
infrastructure. In our view, Wasion is a laggard in the power investment theme; it is
trading at a low valuation and has a high dividend yield. We reiterate our positive view
on Wasion. The latest tender results may boost sentiment on Wasion, which may play
catch-up. We reiterate our ADD rating with a target price of HK$4.23.
