HEGC(SZ:000883) Haitong Securities International·2025-05-13 15:17Investment Rating - The report initiates coverage with an "Outperform" rating and sets a target price of RMB 5.61, based on a PE of 16.5x for 2025 [1][13]. Core Views - The company is expected to see revenue growth in 2024 of RMB 20 billion, a year-on-year increase of 7.3%, and a net profit attributable to shareholders of RMB 1.81 billion, up 3.8% year-on-year [1][13]. - In Q1 2025, the company reported revenue of RMB 4.18 billion, a decline of 19.7% year-on-year, and a net profit of RMB 360 million, down 54.3% year-on-year, primarily due to poor water inflow affecting hydroelectric generation [1][13]. - The report highlights the long-term value release of the company's power generation assets, particularly with the expected transition of the Hubei spot market by June 2025 [1][13]. Financial Summary - The company’s financial performance shows a projected revenue increase from RMB 20.03 billion in 2024 to RMB 20.05 billion in 2025, with a slight growth forecast for subsequent years [3][5]. - Net profit attributable to shareholders is expected to rise from RMB 1.81 billion in 2024 to RMB 2.23 billion in 2025, reflecting a year-on-year growth of 23% [3][5]. - The report indicates that the company’s hydroelectric net profit is expected to decline due to lower utilization hours, while thermal power profits may increase with a decrease in coal prices [1][13]. Segment Performance - In 2024, the hydroelectric segment's net profit increased by RMB 380 million to RMB 1.12 billion, driven by higher generation in Peru and reduced purchase costs [1][13]. - The thermal power segment achieved a net profit of RMB 870 million, an increase of RMB 690 million, attributed to the new Yicheng plant's contribution [1][13]. - The new energy segment's net profit decreased by RMB 260 million to RMB 320 million, impacted by lower prices for wind and solar energy [1][13]. Construction and Future Outlook - The company has two 660,000 kW thermal units under construction, expected to commence operations by the end of 2025 and mid-2026, each projected to contribute RMB 110 million in annual net profit [1][13]. - The report anticipates a net profit of RMB 2.2 billion for 2025, with a PE ratio of 13.6x, reflecting a positive outlook for the company's financial performance [1][13].