中国电力：下半年盈利高速增长可见度高，全年分红有惊喜

Investment Rating - The report maintains a Buy rating for China Power (2380 HK) with a target price of HKD 4.56, implying a potential upside of 27.4% from the current price of HKD 3.58 [1][2] Core Views - Strong H2 Profit Growth: The company is expected to deliver robust profit growth in the second half of the year, driven by significant improvements in the hydro power segment and a special dividend announcement [1] - Hydro Power Recovery: Hydro power operating profit surged 5.3x YoY to RMB 1.35 billion in H1 2024, exceeding expectations by 25%, due to improved water conditions [1] - Wind and Solar Growth: Despite a decline in utilization hours for wind (-8%) and solar (-4%) in H1, operating profits for wind and solar increased by 35% and 63% respectively, supported by new capacity additions [1] - Coal Power Margin Expansion: The coal power segment saw a 44% YoY increase in operating profit, driven by a higher spark spread (RMB 0.118/kWh vs. RMB 0.105/kWh in H1 2023) due to lower coal costs [1] - Special Dividend: A special dividend of RMB 0.05 per share was announced to celebrate the company's 20th anniversary of listing in Hong Kong [1] Financial Performance and Forecasts - H1 2024 Earnings: Net profit rose 53% YoY to RMB 2.57 billion, slightly above expectations by 2% [1] - 2024/25 Profit Growth: Profit growth is forecasted at 69% and 39% for 2024 and 2025 respectively, despite downward revisions of 2.5% and 6.0% due to lower wind and solar utilization hours [2] - Dividend Yield: The company's dividend yield for 2024/25 is expected to exceed 7%, with a payout ratio of 65% or higher, including the special dividend [2] Capacity and Generation Outlook - Hydro Power: Hydro utilization hours are expected to remain at historically high levels, with a 10% upward revision in hydro generation forecast for 2024, leading to a 57% YoY increase in hydro power output [1] - Wind and Solar: The company maintains its 2024 target of adding 3GW of wind and 4GW of solar capacity, despite a 5% and 2% downward revision in wind and solar generation forecasts due to lower wind speeds and solar irradiance [1] - Total Capacity: By 2026, the company's total installed capacity is projected to reach 67,019 MW, with renewable energy accounting for 83.5% of the total [7] Valuation - Sum-of-the-Parts Valuation: The target price of HKD 4.56 is derived from a sum-of-the-parts valuation, with hydro, wind, and solar segments valued at 0.75x, 8.5x, and 8.5x 2025E P/B and P/E multiples respectively [8] Industry Comparison - Peer Comparison: Among covered companies in the renewable energy sector, China Power (2380 HK) has a 27.4% potential upside, compared to peers like Huadian Power (836 HK) with 23.5% and Longyuan Power (916 HK) with 37.2% [9]