2024-07-02 05:31Investment Rating - The report maintains a "Buy" rating for Longyuan Power (0916.HK) with a target price of HKD 10.36, indicating a potential upside of 48% from the current price of HKD 7.02 [1][6]. Core Insights - The parent company, State Energy Investment Group, plans to inject renewable energy assets into Longyuan Power, which is expected to enhance both profitability and valuation. The anticipated scale of the renewable energy capacity to be injected is approximately 4 million kilowatts, supporting the company's goal of adding 30GW of wind and solar capacity during the 14th Five-Year Plan period [4][9]. - Recent government policies signal a positive outlook for the renewable energy sector, particularly regarding the consumption of non-fossil energy. The implementation of green certificate trading and energy-saving policies is expected to enhance the market for green electricity, thereby increasing the profitability of the renewable energy industry [5][10]. - Longyuan Power is positioned as a market leader with significant resource distribution advantages, and its valuation is expected to outperform the industry average, justifying a premium [6][11]. Summary by Sections Financial Data - As of June 28, 2024, Longyuan Power's market capitalization is HKD 122 billion, with total assets of RMB 239,915 million and net assets of RMB 82,026 million. The company has a total share capital of 8,360 million shares, and the 52-week price range is HKD 8.13 to HKD 4.23 [2][3]. Shareholder Information - The major shareholder is State Energy Investment Group, holding 54.91% of the shares [3]. Earnings Forecast - Revenue is projected to grow from RMB 37,638 million in 2023 to RMB 42,949 million in 2024, reflecting a year-on-year growth of 14.1%. Net profit is expected to increase significantly from RMB 6,200 million in 2023 to RMB 8,724 million in 2024, representing a growth of 40.7% [7][14]. Dividend Policy - The report anticipates an increase in dividends, with the dividend per share expected to rise from RMB 11.7 in 2024 to RMB 36.7 by 2026, resulting in a dividend yield of 4.89% in 2024 [7][14]. Valuation Metrics - The target price of HKD 10.36 corresponds to a price-to-earnings (PE) ratio of 9 times for 2024 and 8 times for 2025, indicating a favorable valuation compared to the current market price [6][11].