CYPC(600900) 华源证券·2025-01-17 14:24Company Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company has undergone three rounds of value revaluation since its listing, each with significant implications for future investment [4][5] - The company's outperformance since 2016 is attributed to three segments of value revaluation, with the third segment still ongoing [7] - The first round of revaluation was driven by improved earnings predictability due to the "Four Reservoirs Joint Regulation" [14][15] - The second round of revaluation focused on cash flow stability and earnings resilience, particularly during market downturns [29][30] - The third round of revaluation is centered on the business model, likening the company's long-term outperformance to "differential rent" [48][49] Historical Performance - The company's stock price has shown significant outperformance compared to the CSI 300 index, especially after 2016 [6][7] - The first significant outperformance occurred from late 2015 to early 2016, driven by improved earnings predictability [8][13] - The second outperformance was observed from Q2 2018 to the end of the year, during which the company remained stable amid market volatility [23][24] - The third outperformance has been ongoing since 2022, driven by the company's low covariance with macroeconomic factors [42][43] Earnings and Cash Flow Analysis - The company's earnings stability improved significantly after the 2016 asset injection, with reduced volatility in ROE and more accurate earnings forecasts [16][17][18] - The company's cash flow management has been strong, with free cash flow consistently around 35 billion yuan, significantly higher than net profit [41] - The company has managed to offset the expiration of tax incentives through growth in investment income and savings in financial expenses [34][35] Business Model and Industry Position - The company's business model is likened to "differential rent," with its long-term outperformance attributed to being a low-cost supplier in a homogeneous product market [49][50] - The company's position in the power industry is unique, with a steep cost curve that allows it to maintain high margins despite market fluctuations [53][56] - The company's hydropower assets are among the highest quality in the industry, with a small but significant share of China's total installed capacity [58][59] Valuation and Future Outlook - The company's valuation is influenced by three key factors: the risk-free rate, credit spreads, and the equity risk premium [60][61] - The company's implied discount rate has been narrowing since 2023, but it has not yet broken through previous lows, indicating that the stock is not overvalued [62][63] - The company's future performance is expected to be driven by its core assets, with a focus on the stability and cost advantages of its hydropower operations [69][70] Financial Projections - The company is expected to achieve net profits of 32.82 billion yuan, 34.66 billion yuan, and 36.27 billion yuan for 2024, 2025, and 2026, respectively [72] - The current stock price implies a PE ratio of 22x, 20x, and 19x for 2024, 2025, and 2026, respectively [72]