HTSC·2026-03-17 08:25Investment Rating - The report initiates coverage on Datang Power with a "Buy" rating, assigning a target price of RMB 5.06 for A-shares and HKD 3.25 for H-shares based on a 2026E PE of 13.0x [1][6][8] Core Views - Datang Power serves as the integrated platform for Datang Group's thermal power business, primarily located in northern China, which supports resilient electricity pricing. The company is also expanding its renewable energy capacity, which is expected to contribute to performance growth [1][18] - The company is actively promoting a green and low-carbon transition, with clean energy capacity projected to reach 43% by the end of 2025, up from 30% in 2017. The contribution from renewable energy profits is expected to increase significantly [3][20] - The H-share dividend yield is projected to be attractive, potentially reaching 6.3% in 2026, enhancing the investment appeal [4][21] Summary by Sections Company Overview - Datang Power is a major independent power producer in China, focusing on the construction and operation of power plants, electricity sales, and coal production. The company has diversified into renewable energy, including hydro, wind, and solar power [23][24] Thermal Power Business - The company's coal-fired power units are mainly concentrated in northern China, with a projected 45% of installed capacity in the Hebei, Inner Mongolia, Shanxi, and Tianjin regions by 2024. The efficiency of power generation is improving as older assets are phased out, leading to a positive outlook for thermal power profitability [2][19] Renewable Energy Expansion - Datang Power has made significant strides in expanding its renewable energy portfolio, with a focus on high-quality projects in regions with excellent wind and solar resources. The contribution from renewable energy profits is expected to reach 33% by 2024 [3][20] Dividend Policy - The company revised its dividend policy in May 2025, committing to distribute at least 50% of its distributable profits to shareholders. This is expected to result in a minimum dividend per share of RMB 0.141 for 2025, with H-share yields projected at 6.3% for 2026 [4][21] Market Perspective - The report contrasts with market views that consider Datang Power primarily a thermal power company. It emphasizes the company's dual focus on thermal and clean energy, which positions it as a comprehensive energy operator [5][22]