Datang Power(SH:601991) Hua Yuan Zheng Quan·2024-07-21 03:30Investment Rating - The report initiates coverage with an "Accumulate" rating for the company [4][7]. Core Views - The company is the core power platform of the Datang Group, with potential for value reassessment under state-owned enterprise reforms and electricity system reforms [3][14]. - The company has a dominant position in installed capacity and asset scale among the four listed power platforms under the group, with a commitment to integrate the group's thermal power business [3][14]. - The company is expected to benefit from a shift in coal power's role to peak-shaving power under the electricity system reform, which may enhance the stability of coal power performance [3][9][23]. - The company plans to add over 30GW of new energy capacity during the 14th Five-Year Plan period, with new energy already becoming a major profit contributor [3][16][29]. Summary by Sections Datang Group Core Power Platform - The company is the largest listed power platform of the Datang Group, holding 53.09% of its shares as of the end of 2023 [3][14]. - The company has a total installed capacity of 73.29 million kilowatts, with coal, gas, wind, solar, and hydropower contributing to its portfolio [3][14]. - The company is under pressure to improve its market value as it currently holds over 60% of the group's power assets but only accounts for about 40% of its market value [3][14]. Thermal Power Dominance - The company's thermal power units are primarily located in northern China, with performance heavily influenced by coal prices [3][18]. - In Q1 2024, the company achieved a record net profit of 1.33 billion yuan, indicating recovery from previous losses due to high coal prices [3][18]. - The introduction of capacity pricing mechanisms is expected to stabilize coal power performance and enhance profitability [23][24]. Hydropower and Nuclear Participation - The company controls 9.2GW of hydropower assets, mainly in southwestern China, contributing approximately 1.4 billion yuan in profits in 2023 [3][25]. - The company holds a 44% stake in Ningde Nuclear Power, which provided around 1.271 billion yuan in investment income in 2023 [3][27]. Profit Forecast and Valuation - The company is projected to achieve net profits of 4.3 billion, 5.2 billion, and 6.1 billion yuan for 2024-2026, with a corresponding PE ratio of 18, 14, and 11 times [4][29]. - The intrinsic value of the company is estimated at 57 billion yuan, factoring in contributions from thermal, hydropower, and new energy segments [4][29]. - The company has a commitment to distribute at least 50% of its net profits as dividends, with a projected dividend yield of 3.9% for 2024 [4][29].