CHINA RES POWER(00836) 交银国际证券·2024-06-16 07:01Investment Rating - The report maintains a "Buy" rating for China Resources Power (836 HK) with a target price of HKD 27.55, indicating a potential upside of 17.0% from the current price of HKD 23.55 [1][8]. Core Insights - The company's installed capacity mix shows resilience against changes in utilization rates this year, with clear profit growth potential. Despite weak wind speeds and a slight increase in national power rationing, the company's wind and solar generation increased by 8% and 191% year-on-year in the first four months of the year [1]. - The report notes that the company's hydropower utilization recovery is weaker than expected due to regional hydrological conditions affecting projects in Yunnan and Sichuan. The forecast for hydropower utilization hours has been adjusted downwards by 1.6% [1]. - The high proportion of thermal power generation is beneficial, providing resilience to profitability amid declining wind and solar prices. A 1% change in thermal fuel costs is estimated to impact profits by approximately 2% for 2024/25, while a 1% change in wind/solar utilization hours is expected to affect profits by about 1.2% [1]. - The report adjusts the target price upwards to HKD 27.55 based on operational cost adjustments and hydropower utilization hours, while also lowering profit forecasts for 2024/25 by 0.5% and 1.3% respectively [1]. - The company has shown superior return on equity (ROE) compared to peers, contributing to its attractiveness in the market, especially with a focus on dividends [1]. Financial Overview - Revenue is projected to grow from HKD 103,305 million in 2022 to HKD 126,419 million by 2026, with a compound annual growth rate (CAGR) of approximately 7.5% [4]. - Net profit is expected to increase significantly from HKD 7,463 million in 2022 to HKD 23,347 million by 2026, reflecting a CAGR of around 25.5% [4]. - Earnings per share (EPS) is forecasted to rise from HKD 1.46 in 2022 to HKD 4.78 by 2026, indicating strong growth potential [4]. - The company’s dividend yield is projected to increase from 2.5% in 2022 to 8.1% by 2026, enhancing its attractiveness to income-focused investors [4]. Installed Capacity and Generation Forecast - The total installed capacity is expected to grow from 52,581 MW in 2022 to 88,507 MW by 2026, with the share of renewable energy increasing from 32.3% to 58.1% over the same period [5]. - The forecast for electricity sales indicates a significant increase, with total sales expected to rise from 184,604 GWh in 2024 to 250,723 GWh by 2026 [5]. Valuation Summary - The report utilizes a sum-of-the-parts valuation approach, estimating the value of thermal power at HKD 2.97 per share and renewable energy at HKD 24.58 per share, leading to a total valuation of HKD 27.55 per share [6].