ZZEPC(600023) 华福证券·2024-11-27 00:24Investment Rating - The report initiates coverage with a "Hold" rating for Zhejiang Energy Power [3]. Core Views - Zhejiang Energy Power is positioned as a leading provincial power company with strong performance prospects, transitioning towards a dual business model of thermal power and new energy manufacturing [1][2]. - The company has shown a significant recovery in thermal power profitability, supported by a decrease in coal prices and a stable electricity price environment, which enhances its earnings outlook [1][2]. - The company is actively investing in nuclear power and solar energy, aiming to strengthen its dual business strategy and capitalize on the growing demand for renewable energy [2][3]. Summary by Sections 1. Strong Performance and Future Prospects - Zhejiang Energy Power is the largest local power generation company in China, primarily engaged in thermal power generation, with a total installed capacity of approximately 35.17 GW as of the end of 2023 [1][19]. - The company has successfully transitioned towards a dual business model by acquiring a 9.7% stake in Zhonglai, entering the high-end equipment manufacturing sector for new energy [1][15]. - The company has a solid historical dividend payout record, with a projected high dividend payout ratio in the future based on improved earnings [1][32]. 2. Recovery in Thermal Power Profitability - The company manages approximately 30.88 GW of coal-fired power and 4.03 GW of gas-fired power, with expectations for new units to be operational in 2024 [1][38]. - The electricity demand in Zhejiang is expected to remain tight, ensuring high utilization hours for the company's power generation units [1][49]. - The company anticipates a continued improvement in profitability due to the recovery of coal prices and the implementation of capacity pricing starting in 2024 [1][2]. 3. Investment in Nuclear Power and Solar Energy - The report highlights the low proportion of nuclear power in China's energy mix, with expectations for significant growth in nuclear capacity by 2035 [2]. - The company is strategically investing in nuclear projects and has entered the solar energy sector through its stake in Zhonglai, aiming for a balanced growth strategy [2][3]. - The company is focused on leveraging its thermal power and new energy resources to develop complementary projects, enhancing its overall growth potential [2][3]. 4. Earnings Forecast and Investment Recommendations - The forecast for the company's revenue from 2024 to 2026 is projected to be 941.15 billion, 970.79 billion, and 1,007.07 billion yuan, respectively, with corresponding net profits of 77.69 billion, 84.22 billion, and 90.85 billion yuan [3][4]. - The report emphasizes the potential for continued earnings growth driven by new capacity coming online and favorable market conditions [3][4].