CHINA POWER(02380) 交银国际证券·2024-10-02 04:39Investment Rating - The report maintains a "Buy" rating for China Power (2380 HK) with a target price of HKD 4.56, indicating a potential upside of 22.9% from the current price of HKD 3.71 [4]. Core Views - The report highlights the restructuring of hydropower assets to an A-share listing platform, which is expected to enhance valuation. China Power plans to sell its hydropower assets (5.9 GW, approximately 60% stake) to its parent company, Guodian Investment, with the transaction expected to be detailed around October 18 [1][2]. - Management has outlined a preliminary plan to further integrate hydropower assets within three years, aiming to consolidate approximately 20 GW of remaining hydropower assets into the A-share platform [1]. - The transaction is viewed as a strategic move to leverage the higher valuations of hydropower assets in the A-share market, positioning China Power as a comprehensive clean energy flagship platform focusing on hydropower, wind, solar, and high-quality coal power [1][2]. Summary by Sections Hydropower Projects Overview - The report provides a detailed overview of China Power's hydropower projects, listing capacities and valuations in millions of RMB. The total capacity of the listed projects is 5,921 MW, with individual project valuations ranging from 59.9 million to 64.9 million RMB [2]. Valuation Metrics - The report outlines the valuation benchmarks for different segments of China Power's business, indicating a valuation of 0.75x the 2025 estimated price-to-book ratio for the hydropower segment. This is significantly lower than the approximately 3x price-to-book ratio of comparable companies [3]. - The report suggests that the hydropower segment's valuation could potentially increase to 1.5x or higher, which would enhance the overall valuation by approximately HKD 0.4-0.5 per share [1][3].