ZZEPC(600023) 广发证券·2024-09-05 06:10Investment Rating - The report maintains a "Buy" rating for the company [4]. Core Views - The company achieved a significant year-on-year increase in net profit of 41.3%, reaching 39.3 billion yuan in the first half of 2024, despite a 3.7% decline in revenue to 402 billion yuan [2][9]. - The improvement in profitability is attributed to better coal power margins and stable investment income, with investment income amounting to 26 billion yuan, a 3.7% increase year-on-year [2][17]. - The company is expected to maintain a high return on equity (ROE) and continue to grow its net assets due to ongoing capacity expansions and improvements in coal costs [2][24]. Summary by Sections 1. Main Business Profitability and Investment Income - The company's main business profitability improved, with a gross margin increase of 4.6 percentage points year-on-year, supported by stable electricity prices and lower coal costs [2][21]. - The first half of 2024 saw a significant increase in operating cash flow, which reached 53 billion yuan, a 305% increase year-on-year [2][20]. 2. Impact of Hydropower and Coal Prices - The company's electricity generation increased by 0.8% year-on-year, but the hydropower output during the flood season suppressed coal power generation [21]. - The average settlement price for electricity was approximately 0.434 yuan per kilowatt-hour, reflecting a 2.3% decrease year-on-year [21][22]. 3. High ROE and Continuous Asset Growth - The company’s ROE exceeded 10% by the end of 2023, with expectations for continued growth driven by new capacity coming online [24][25]. - The company has ongoing projects that will enhance its coal power capacity, with a total expected capacity of 36.88 GW upon completion [24]. 4. Dividend Expectations - The company is projected to distribute cash dividends of 42 billion yuan in 2024, corresponding to a dividend yield of 5% based on the latest closing price [2][4]. 5. Financial Projections - The forecasted net profits for 2024, 2025, and 2026 are 83.32 billion yuan, 92.35 billion yuan, and 98.64 billion yuan, respectively, with corresponding price-to-earnings ratios of 9.83, 8.87, and 8.31 [2][3].