ZZEPC(600023) 广发证券·2024-03-04 16:00Investment Rating - The report assigns a "Buy" rating to the company with a target price of 6.63 CNY per share based on a 1.3x PB valuation for 2024 [4]. Core Views - The company is the largest power generation enterprise in Zhejiang Province and the only listed platform for thermal power under the Zhejiang Energy Group. As of the end of 2022, the company had a controlled installed capacity of 33.11 GW, with coal and gas power accounting for 87% and 12% respectively. The company’s power generation and installed capacity account for over 50% of the province's regulated power plants [2][11]. - The company reported a net loss of 1.8 billion CNY in 2022, but is expected to achieve a net profit of 6.106 to 7.318 billion CNY in 2023, a significant year-on-year increase of 79.35% to 91.47% [2][20]. - The company anticipates a recovery in dividends, with a historical dividend payout ratio exceeding 50% from 2015 to 2020. If the performance midpoint and a 50% payout ratio are considered, the current dividend yield is nearly 5% [2][20]. - The company’s return on equity (ROE) is expected to remain high, with a projected increase in net assets of over 20% [2][20]. Summary by Sections 1. Coastal Thermal Power Leader with High ROE Expectation for Dividends and Net Asset Growth - The company is the largest power generation enterprise in Zhejiang Province and the only listed thermal power platform under the Zhejiang Energy Group, controlling 73.22% of shares as of Q3 2023 [11][12]. - The company’s thermal power profit is rebounding, with a significant recovery in 2023 expected due to falling coal prices and improved long-term coal contract performance [2][20]. - High ROE is anticipated to drive rapid net asset growth, with net assets projected to reach 964 million CNY [2][20]. 2. Tight Power Supply and Stable Power Generation - The company’s thermal power generation is expected to increase, with a forecast of 1,632 billion kWh in 2023, a year-on-year increase of 7.4% [2][20]. - The company’s average on-grid electricity price in 2022 was 0.435 CNY per kWh, reflecting an 18.5% year-on-year increase [16][23]. 3. Stable Income from Nuclear Power and New Energy Ventures - The company has a stable income from its nuclear power investments, contributing nearly 1.4 billion CNY in investment income in 2022 [2][23]. - The acquisition of Zhonglai Co. in February 2023 is expected to contribute additional profit growth, with Zhonglai achieving a net profit of 480 million CNY in Q1-Q3 2023, a year-on-year increase of 40.9% [2][20]. 4. Profit Forecast and Investment Recommendations - The company’s projected net profits for 2023, 2024, and 2025 are 6.870 billion CNY, 8.117 billion CNY, and 9.423 billion CNY respectively, with corresponding PE ratios of 10.74, 9.09, and 7.83 [2][20]. - The report emphasizes the company’s potential for accelerated public utility transformation and recommends a "Buy" rating based on its strong fundamentals and market position [2][4].