BOCOM International·2025-05-27 08:55Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 3.77, indicating a potential upside of 18.2% from the current price of HKD 3.19 [2][12]. Core Views - The report highlights that the company's coal-fired power price differential is expected to outperform expectations in the first half of the year, and the current dividend yield remains attractive. The target price has been raised due to adjustments in financial forecasts and valuation methods [2][6]. Financial Overview - Revenue projections for the company are as follows: - 2023: RMB 44,262 million - 2024: RMB 54,213 million (22.5% YoY growth) - 2025E: RMB 55,711 million (2.8% YoY growth) - 2026E: RMB 59,410 million (6.6% YoY growth) - 2027E: RMB 65,201 million (9.7% YoY growth) [5][13] - Net profit estimates are: - 2023: RMB 3,084 million - 2024: RMB 3,862 million (25.3% YoY growth) - 2025E: RMB 4,767 million (23.4% YoY growth) - 2026E: RMB 5,670 million (18.9% YoY growth) - 2027E: RMB 7,395 million (30.4% YoY growth) [5][13]. Operational Performance - The company's total power generation for January to April remained stable, with a slight increase of 0.3% YoY. Wind and solar power generation saw significant increases of 32.1% and 13.6% respectively, while coal power generation decreased by 14.2% due to asset sales [6][7]. - The report notes that the company plans to prioritize wind power projects with good grid connection resources before June, which is expected to support stable growth in overall power generation [6]. Valuation Adjustments - The report adjusts the valuation of the company's hydropower assets to 1.9 times the 2025 estimated book value, up from 1.5 times, leading to an increase in the target price to HKD 3.77 from HKD 3.51 [6][9]. - The report also notes a decrease in fuel costs for the coal-fired segment, which is expected to support profit forecasts [6]. Shareholder Confidence - The parent company has increased its stake in the company, indicating confidence in its future performance. The current dividend yield of 6% for 2025 and 7% for 2026 is considered attractive for investors [6][12].