CYPC(SH:600900) Guoxin Securities·2024-02-01 16:00Investment Rating - The report maintains a "Buy" rating for the company [5]. Core Views - The company is a rare cash cow asset with stable growth and high dividends, being the largest publicly listed hydropower company globally and gradually forming the world's largest clean energy corridor [1][2]. - The company has a unique advantage in water resources, operating six hydropower stations on the Yangtze River with a total installed capacity of 71.695 million kilowatts, ranking first globally [1]. - The company has committed to high dividends, with cash dividends accounting for 61%-94% of net profit since 2016, and a stable dividend yield of over 3.6% in recent years [2]. - The company is expected to benefit from rising electricity prices and reduced financial costs, with a long-term focus on integrated water, wind, and storage projects as new growth drivers [2]. Summary by Sections Financial Performance - In 2023, the company's revenue and net profit attributable to shareholders are projected to be 78.1 billion and 27.4 billion yuan, respectively, with a CAGR of 13% and 12% from 2013 to 2023 [1]. - The company’s earnings per share (EPS) for 2023-2025 are forecasted at 1.12, 1.40, and 1.49 yuan, with corresponding price-to-earnings (PE) ratios of 22, 17, and 16 times [2][3]. - The company’s reasonable valuation is estimated to be between 28-29 yuan per share, indicating a premium of 15%-22% over the current stock price [2]. Business Model and Growth Drivers - The company has been gradually acquiring hydropower assets from the Three Gorges Group, with the installed capacity growth being a core driver of performance improvement [1][2]. - The company’s cash flow has consistently supported high dividends, with operating cash flow maintained at 1.4-2 times net profit over the past decade [2]. - The company is actively planning the development of integrated water, wind, and storage projects, which may open up new long-term profit spaces [2][3]. Market Environment - The company is positioned to benefit from a low-interest-rate environment, which can help reduce financing costs and enhance intrinsic value [2]. - The report highlights the increasing marketization of electricity prices, which is expected to drive up overall electricity prices, benefiting the company [2][3]. - The hydropower sector is characterized by its stability and resilience against macroeconomic fluctuations, making it an attractive investment in the current economic climate [2][18].