According to Zhitong Financial, Tian Lun Gas (01600.HK)'s share price has continued to rise recently. Zhongtai International issued a research report, which granted Tian Lun Gas a "buy" rating, and raised the target price to HKD 11. On January 21, Tian Lun Gas closed 1% higher at HKD 9.11, and its share price rose 5.20% for the fifth consecutive day, hitting a three-and-a-half year high. On the same day, Tian Lun Gas issued the latest voluntary announcement and signed a strategic cooperation agreement with PowerChina Henan Electric Power Survey & Design Institute Co., Ltd. Since Tian Lun Gas announced its three-year strategic development plan and appointed the new General Manager, it has successively signed strategic cooperation agreements with three powerful central enterprises in less than two months.

01. Cooperation content between Tian Lun Gas and PowerChina Henan

Following the principle of "complementary advantages, mutual development and win-win cooperation", both parties will give full play to the advantages in their respective business fields, carry out all-round technical and commercial cooperation, establish a comprehensive strategic cooperation relationship and form a strategic joint force. The parties aim to give full play to the complementary advantages of market development and technology, establish a long-term friendly strategic cooperation relationship and seek for mutual benefit and win-win development.

New energy

The parties will cooperate with each other by taking advantage of their respective advantages, select suitable areas for the development of distributed PV, ground centralized PV, distributed wind power, ground centralized wind power, energy storage, biomass gas and other projects, innovate and demonstrate the comprehensive application of various energies, and build a new energy system dominated by clean energy.

Low carbon industry

The parties will jointly carry out the development and construction of intelligent energy and industrial energy-saving reconstruction projects, especially in cement industry, steel industry, chemical raw materials and chemical products manufacturing industry, non-metallic mineral product industry, ferrous metal smelting and pressing industry, non-ferrous metal smelting and pressing industry and other high energy-consuming industries, carry out the recycling reconstruction of the park, facilitate the cascade utilization of energy, and promote the resource utilization of industrial excess pressure, waste heat, waste gas and waste liquid.       

Regional integrated energy

The parties will jointly develop and construct clean energy supply projects, coordinate and promote the construction of intelligent energy cities, demonstration counties for clean energy and pilot projects for energy revolution, make use of their advantages of rich natural gas market and experience in development, construction and operation, jointly optimize the scheme design, and build demonstration projects for rural energy revolution and intelligent energy cities by taking distributed, renewable and intelligent implementation paths.

Charging and battery swapping stations

PowerChina Henan gives full play to its advantages in charging and battery swapping station technology, while the Group upgrades and renovates the functions of the original gas stations on the basis of existing gas stations, and at the same time, use the photovoltaic technology to transform the gas stations into an intelligent charging station mode integrating PV, energy storage, charging and stopping, and promote the green development of urban traffic.

Profile of PowerChina Henan

Established in August 1958, PowerChina Henan Electric Power Survey & Design Institute Co., Ltd. is affiliated to Power Construction Corporation of China, one of the world's top 500 enterprises and a class A group enterprise. It is a national large comprehensive design enterprise with class A qualification for comprehensive engineering design.

PowerChina Henan has various industry qualifications issued by the state, such as class A qualification for comprehensive engineering design, class A qualification for comprehensive engineering investigation, class A qualification for engineering consultation, class A qualification for engineering supervision, class A qualification for surveying and mapping, class A qualification for engineering cost consultation in the power industry, class A qualification for approval of civil air defense engineering design enterprises, license for special equipment (pressure pipeline), nuclear power consultation, foreign contracting engineering, etc.

With technology and management as its core competitiveness, and four major businesses of planning and consultation, survey and design, general contracting of projects, and investment and operation, PowerChina Henan has a business scope covering power generation and transmission, nuclear power, new energy, construction, municipal, logistics and storage, overseas projects and other fields. Especially in recent years, on the basis of consolidating the traditional power market, PowerChina Henan vigorously developed the general contracting market, overseas market and new energy market, and seized opportunities to enter non-traditional markets, investment business and other emerging industries.

Reasons and benefits of signing strategic cooperation agreement

In the context of "double carbon" goals, green and low-carbon development becomes an inevitable choice, and energy transition is imperative. The energy cooperation is in line with the development strategic plan of Tian Lun Gas in the next three years (2022-2024), which is conducive to deepening the transition of clean energy and comprehensively promoting sustainable development.

As a large-scale comprehensive design enterprise with class A qualification for national engineering design, PowerChina Henan has strong technical strength, excellent performance and good reputation in domestic and foreign markets.

As a powerful listed energy enterprise, Tian Lun Gas has rich resources and experience in market development in China, especially in Henan Province, and has strong project investment ability. This cooperation will give full play to their respective advantages and influences in market and technology, jointly improve market competitiveness, comprehensively promote the mutual development of both parties' business, and achieve mutual benefit and win-win results.

02. Positive performance of share price, with the increase leading the industry

On November 29, 2021, Tian Lun Gas issued the "New Strategic Development Outline" of the Company for the next three years (2022-2024) and appointed Ms. Qin Ling, who has rich management practice experience in energy innovation and has the work background in ENN Energy, as the General Manager of the Company to clearly develop the innovative energy business. Since then, Tian Lun Gas successively signed strategic cooperation agreements with SPIC Henan Electric Power Co., Ltd. and CECEP Building Energy Conservation Co., Ltd. to actively deploy in new energy business.

Besides the strategic partnership established with PowerChina Henan this time, Tian Lun Gas successively signed strategic cooperation agreements with three powerful central enterprises after the announcement of the three-year strategic development plan and the appointment of the new General Manager. Considering that Tian Lun Gas introduced the strategic shareholder Zhuhai Port and planned the cooperative development of distributed PV power generation projects in July last year, Tian Lun Gas' share price has been positive since December 2021, with the increase leading the industry.

03. Zhongtai International raised target price of Tian Lun Gas

Combining the recent positive news and positive share price reaction of Tian Lun Gas, Zhongtai International issued a research report on January 20, which granted Tian Lun Gas (01600.HK) a "buy" rating and raised the target price to HKD 11, with about 22% room to run at the current share price.

In terms of gas sales, the Bank estimated that the growth rate of retail gas sales of Tian Lun Gas in 2021 can reach the standard, with a year-on-year growth of about 25%. At the same time, according to the "New Development Strategy Outline" announced by the Company in December 2021 for the development during 2022-2024, it is believed that the annual compound growth rate of total retail gas sales can reach no less than 25% in the future.

In terms of new energy business, the Bank predicted that the Company will successively invest in the development of new energy business in 2022. The distributed PV power generation project developed by Tian Lun Gas in cooperation with its strategic shareholder Zhuhai Port and the green and low-carbon business cooperation with SPIC Henan Electric Power Co. Ltd. are expected to be implemented this year.

In addition, Zhongtai International believes that Tian Lun Gas actively strengthens ESG management, such as improving safety management, strengthening anti-corruption, increasing the proportion of independent directors, improving employee incentive system, and promoting energy conservation and emission reduction management, which will benefit the sustained and healthy development of the enterprise.