Huaihe Energy(600575) HTSC·2025-03-28 06:52Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 4.93 [7][8]. Core Views - The company reported a revenue increase of 9.8% year-on-year to RMB 30.02 billion for 2024, while the net profit attributable to shareholders rose by 2.2% to RMB 858 million, which was below expectations due to asset impairment related to the planned shutdown of certain power plants [1]. - The company plans to not distribute cash dividends in 2024 but commits to a dividend payout ratio of no less than 75% for the years 2025-2027, with a minimum DPS of RMB 0.19 (including tax) [1]. - The average on-grid electricity price for 2024 is projected to be RMB 462.73 per MWh, reflecting a slight decrease of approximately RMB 4.7 per MWh year-on-year [2]. - The logistics and trading business revenue is expected to grow by 12.8% year-on-year to RMB 20.52 billion in 2024, while coal sales revenue is projected to decline by 3.0% to RMB 1.875 billion [3]. Summary by Sections Financial Performance - The company achieved a total on-grid electricity generation of 159.13 billion kWh in 2024, up 6.2% year-on-year, driven by increased demand in Anhui province [2]. - The gross margin for the electricity business improved by 4.3 percentage points to 13.4% due to lower coal prices [2]. - The company’s logistics and trading revenue for 2024 is expected to reach RMB 20.52 billion, with a stable gross margin [3]. Profitability Forecast - The report forecasts a decline in net profit attributable to shareholders for 2025 and 2026 by 14.0% and 11.1% respectively, adjusting the estimates to RMB 909 million and RMB 942 million [4]. - The projected EPS for 2025 is RMB 0.23, with a gradual increase to RMB 0.25 by 2027 [6][22]. Valuation Metrics - The company’s target price is set at RMB 4.93, based on a projected PB of 1.55x for 2025, reflecting the potential for significant asset injections from ongoing projects [4]. - The report indicates a market capitalization of RMB 13.68 billion, with a closing price of RMB 3.52 as of March 27, 2025 [8].