ZZEPC(SH:600023) SINOLINK SECURITIES·2025-04-29 01:28Investment Rating - The report maintains a "Buy" rating for the company, with expected earnings per share (EPS) of 0.50, 0.59, and 0.61 for 2025, 2026, and 2027 respectively, corresponding to price-to-earnings (P/E) ratios of 12x, 10x, and 10x [4]. Core Insights - The company reported a revenue of 88.0 billion yuan for 2024, a decrease of 8.3% year-on-year, while net profit attributable to shareholders was 7.75 billion yuan, an increase of 18.9% year-on-year. For Q1 2025, revenue was 17.6 billion yuan, down 12.1% year-on-year, and net profit was 1.07 billion yuan, down 40.8% year-on-year [2][3]. - The company achieved a significant improvement in thermal power profitability in 2024, with a total electricity generation of 164.7 billion kWh, up 6.6% year-on-year, primarily due to the full operation of the Six Horizontal Power Plant Phase II project and increased electricity demand in Zhejiang Province [2]. - The company plans a cash dividend of 0.29 yuan per share for 2024, representing a 50.2% payout ratio, with a current dividend yield of approximately 5.0% [2][4]. Summary by Sections Financial Performance - In 2024, the company experienced a revenue decline of 8.3% to 88.0 billion yuan, while net profit increased by 18.9% to 7.75 billion yuan. The projected revenues for 2025 and 2026 are 81.78 billion yuan and 83.14 billion yuan, respectively, with expected growth rates of -7.1% and 1.7% [8][10]. - The company’s operating cash flow remains healthy, covering capital expenditures, and reducing the debt-to-asset ratio from 45.7% at the end of 2023 to 42.3% in Q1 2025 [4]. Market Conditions - The decline in electricity prices in Q1 2025 was greater than the reduction in costs, leading to pressure on profitability. The average purchase price for industrial and commercial electricity in Zhejiang Province fell by 72 yuan/MWh year-on-year [3]. - The company’s coal inventory was high at the end of 2024, which has not yet reflected in the financial statements, contributing to the pressure on Q1 2025 earnings [3]. Future Outlook - The company is expected to see marginal improvements in profitability as high-cost inventory is consumed, with anticipated net profits of 6.63 billion yuan, 7.91 billion yuan, and 8.14 billion yuan for 2025, 2026, and 2027, respectively [4][8].