HTSC·2026-03-17 10:30Investment 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 integration 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 in hydro, nuclear, wind, and solar, contributing to a second growth curve [1][18] - The company is actively promoting a green low-carbon transition, with the share of clean energy capacity expected to reach 43% by the end of 2025, up from 30% at the end of 2017. The contribution of new energy profits is projected to continue increasing [3][20] - The H-share dividend yield is expected to be attractive, with estimates of 6.3% for 2026, reflecting the company's commitment to returning profits to shareholders [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, and aims to enhance its operational efficiency [23][24] Thermal Power Business - The company's coal-fired power units are primarily located in North China, with a projected 45% of coal-fired 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 decrease in coal consumption per unit of electricity generated [2][19] - The company anticipates a positive shift in coal power profitability, with a projected profit of RMB 0.013 per kWh by 2024, supported by declining coal prices and improved pricing dynamics in the northern electricity market [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. By 2024, the contribution of new energy profits is expected to reach 33% of total profits [3][20] - The company also holds stakes in nuclear power plants, which are expected to provide stable investment returns, with projected contributions from the Ningde and Xudabao nuclear projects [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 perceive Datang Power as 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]