This year,the expansion of energy-related REITs has accelerated.

The Shanghai Stock Exchange disclosed on July 3rd that the public offering of CITIC Construction Investment Mingyang Smart New Energy REIT was concluded ahead of schedule.The Huaxia Tebian Electric Engineering New Energy REIT,which began trading on the 2nd,saw a first-day increase of 22.3%.

According to Wind data,energy-related REIT projects cover various new energy sectors including hydropower,wind power,and photovoltaics.As of now,there are 38 publicly offered REITs listed for trading in the entire market,with 5 of them being energy infrastructure projects.

Industry insiders analyzed to Yicai that the underlying assets of energy infrastructure public REITs are power projects.The underlying assets of the energy infrastructure public REITs that have been listed are all new or clean energy projects.Social capital can support the development and construction of more new energy projects through the public REITs approach.

"The performance and operational capabilities of the original equity holders of energy REITs products are also under scrutiny," said the industry insiders.Against the backdrop of intensified competition in the new energy industry,the gradual phase-out of wind power subsidy policies has put pressure on industry profits.In addition,as the scale of new energy grid connection expands,the phenomenon of oversupply of electricity is becoming increasingly severe,with rising rates of wind and light abandonment,and new energy consumption faces pressure.

New Energy REITs Take the Lead in Recovery

This year,the performance of public REITs in the secondary market has been poor.As of the close on July 3rd,22 out of the 38 listed public REIT products were in a state of issuance breakage,accounting for about 57%.

There is a clear division of trends within the sector,with energy REITs leading the gains.As of the close on the 3rd,the one-year gains for Penghua Shenzhen Energy REIT,AVIC Jingneng Photovoltaic REIT,CITIC Construction Investment National Electric Investment New Energy REIT,and Harvest China Power Construction Clean Energy REIT were 22%,20%,22%,and 19%,respectively.

Ping An Securities analyzed that since June,REITs have fluctuated narrowly,showing a differentiated trend,with the energy sector,which is relatively insensitive to economic cycles,being favored.This is also reflected in the primary market,where the subscription multiples of Huaxia Tebian Electric Engineering Energy REIT and CITIC Construction Investment Mingyang Smart Energy REIT have successively set new records,while the subscription multiples of other REITs in the primary market this year have mostly been below 2 times.

According to the announcement,CITIC Construction Investment Mingyang Smart Energy REIT had 142 allocation targets managed by 58 offline investors participating in the pricing,with an effective subscription multiple as high as 91.38 times,setting a new record for the offline inquiry price multiple of public REITs products within the year.During the issuance phase,the effective subscription multiple for the offline offering of Huaxia Special Transformer Electric New Energy REIT was 67.8 times,and the effective subscription multiple for public investors was 448.5 times,setting a new record for the public offering allocation ratio of publicly offered REITs.

In addition,the supply side has accelerated the pace of issuance.In addition to two new energy REITs,the expansion applications for ICBC Rui Xin Meng Energy Clean Energy REIT and AVIC Jingneng Photovoltaic REIT have been accepted.

New Energy Industry Faces Intensified Competition and Profit Pressure

In recent years,the competition in the new energy industry has intensified.

The industry insiders analyzed to First Financial that the instability of new energy and the regulatory limitations of the power system can lead to absorption difficulties when there is an imbalance of supply and demand,resulting in excess electricity that cannot be effectively utilized.At the same time,the gradual withdrawal of wind power subsidy policies has put pressure on the industry's profitability.

Against this backdrop,the performance and operational capabilities of the original equity holders of new energy REIT products have also been affected.

Data shows that the underlying assets of CITIC Construction Investment Mingyang Smart New Energy REIT are the Huanghua Old City Wind Farm project in Cangzhou City,Hebei Province,and the Hongtu Jingzi Wind Farm project in Chifeng City,Inner Mongolia,with installed capacities of 100MW and 50MW,respectively.

The prospectus for CITIC Construction Investment Mingyang Smart New Energy REIT mentions that the Huanghua Old City Wind Farm is expected to no longer enjoy central financial subsidies after 2033,and the Hongtu Jingzi Wind Farm is expected to no longer enjoy central financial subsidies after 2030,which will lead to the risk of national subsidies expiring for both projects.

If there are no other compensatory measures after the national subsidies expire,it is expected that from 2030 onwards,the total operating income of the project companies will show a significant decline.As of the date of issuance of the prospectus,the proportion of renewable energy subsidies in the electricity price composition of the Huanghua Old City Wind Farm and Hongtu Jingzi Wind Farm projects is 39.27% and 41.63%,respectively.

According to public disclosure,Huaxia Special Transformer Electric New Energy REIT is the first private new energy public REIT in the country.The underlying asset of this fund is the Hami photovoltaic power generation project with an installed capacity of 150MW,and the main electricity consumption is through the Tianzhong direct current transmission to supply the power-consuming province of Henan.TBEA Co.,Ltd.'s President,Huang Hanjie,mentioned that the issuance of public REITs is aimed at accelerating the recovery of funds from existing assets through public market fundraising,driving incremental growth with existing assets,and promoting the development of new energy power generation projects.In the future,new energy power generation projects that meet relevant policies are planned to be included in the Huaxia TBEA New Energy REIT platform through additional fundraising,expanding the scale of new energy power generation assets under fund investment management.

In 2023,TBEA's net profit decreased by 32.75% year-on-year,and in the first quarter of this year,it decreased by 11.12% year-on-year,with the net profit decline exceeding 57% year-on-year.TBEA stated that the decline in net profit was mainly due to the lower average sales prices of the company's polysilicon products and coal products compared to the same period last year,leading to a reduction in net profit.

CITIC Securities believes that currently,the underlying assets of energy REITs are mainly concentrated in clean energy power generation facilities such as hydropower,wind power,and photovoltaic.As the construction of the electricity spot market progresses,the proportion of electricity generated by new energy power generation projects in market transactions is expected to steadily increase.Based on this,CITIC Securities predicts that the grid electricity prices for wind and photovoltaic REITs are likely to gradually align with regional market-based electricity prices,which will enhance the consumption level of new energy power and further drive the growth of grid-connected electricity generation.