POWERCHINA Ltd(601669) 开源证券·2024-07-05 09:01Investment Rating - Buy (First Coverage) [1] Core Views - The company is a global leader in power engineering, with a comprehensive industrial chain in water conservancy and hydropower, holding over 50% of the global market share in large and medium-sized water conservancy and hydropower construction [6] - The company's future growth lies in new energy operations and pumped storage, with pumped storage expected to grow at a CAGR of 10.3% from 2024 to 2025 [3] - The company has a strong position in the new energy sector, with a clean energy ratio of 84.6% in its installed capacity as of 2023 [3] Financial Summary and Valuation - Revenue is expected to grow from 608.4 billion yuan in 2023 to 804.8 billion yuan in 2026, with a CAGR of 9.6% [4] - Net profit attributable to the parent company is projected to increase from 12.99 billion yuan in 2023 to 18.02 billion yuan in 2026, with a CAGR of 11.4% [4] - The company's P/E ratio is expected to decrease from 7.5x in 2023 to 5.4x in 2026, indicating potential undervaluation [4] Business Segments Engineering Design and Contracting - The company dominates the domestic market, undertaking over 80% of river planning and medium to large hydropower station design tasks, and 65% of construction tasks [14] - The segment contributed over 90% of the company's revenue in 2023, with a CAGR of 18.1% from 2019 to 2023 [23] Power Investment and Operation - The company's installed capacity reached 2718.85 MW by the end of 2023, with wind, solar, and independent storage capacities showing significant growth [3] - The segment's revenue grew at a CAGR of 9.0% from 2019 to 2023, with a gross margin of 44.40% in 2023 [24] Pumped Storage - The company is a leader in the pumped storage market, participating in over 90% of domestic pumped storage projects [3] - New contracts for pumped storage projects surged by 220.61% in 2023, reaching 78.05 billion yuan [3] Market Opportunities - The company is well-positioned to benefit from China's "dual carbon" goals, with significant opportunities in new energy and pumped storage [3] - The pumped storage market is expected to grow rapidly, with a target of 62 GW installed capacity by 2025, requiring a CAGR of 10.3% from 2024 to 2025 [63] Strategic Initiatives - The company completed a 13.4 billion yuan private placement in 2023, with funds allocated to pumped storage, offshore wind power, and key engineering projects [68] - The company aims to add 30 GW of wind and solar capacity during the 14th Five-Year Plan period, with a CAGR of 50.5% from 2023 to 2025 [57]