CYPC(600900) 国泰君安·2024-03-17 16:00Investment Rating - Maintains an "Overweight" rating with a target price of CNY 28.60 [3][5] - The current stock price is CNY 24.71, indicating potential upside [5] Core Investment Thesis - The company's stable dividend payout is undervalued, with potential for increased dividend value as investor required returns decline [3] - The company's hydropower operations are robust, with stable cash flow supporting consistent dividends even in years with lower water inflows [3] - The stock price is primarily driven by changes in the required rate of return (r), which is expected to decline due to falling risk-free rates and reduced risk premiums [3] - Catalysts include stable cash dividends and a downward shift in the risk-free rate [3] Financial Performance and Projections - Revenue is projected to grow from CNY 78.9 billion in 2023E to CNY 91.6 billion in 2025E, with a CAGR of 7.6% [4] - Net profit attributable to shareholders is expected to increase from CNY 27.4 billion in 2023E to CNY 37.0 billion in 2025E, with a CAGR of 16.2% [4] - EPS is forecasted to rise from CNY 1.12 in 2023E to CNY 1.51 in 2025E [4] - Dividend per share (DPS) is projected to increase from CNY 0.82 in 2023E to CNY 1.06 in 2025E, with a dividend yield of 4.3% in 2025E [4] Valuation - The company's 2024E PE ratio is 17.37x, below the industry average of 20.7x, indicating potential undervaluation [16] - The 2024E PB ratio is 2.58x, slightly above the industry average of 2.2x, reflecting the company's premium as a leading hydropower player [17] - DDM valuation suggests an intrinsic value of CNY 33.07 per share, based on a required return of 5.44% and a perpetual growth rate of 0.5% [20] Industry and Competitive Position - The company is a leading hydropower operator in China, managing key stations along the Yangtze River, including the Three Gorges Dam [9] - Hydropower generation is prioritized over thermal power, ensuring stable utilization hours and revenue [23] - The company benefits from "six-reservoir joint regulation," which mitigates the impact of water inflow fluctuations on power generation [25] Dividend Stability and Shareholder Returns - The company has maintained stable and increasing dividends for 10 consecutive years, with a payout ratio of 94.3% in 2022 [35] - Strong cash flow from operations, which is 1.65x net profit, supports the company's ability to smooth dividend payouts during periods of lower water inflows [35] - External directors make up 69.2% of the board, ensuring a focus on shareholder interests [36] Market Sentiment and Investor Behavior - Institutional investors, including energy industry players and financial institutions, have been increasing their holdings in the company [43] - Northbound investors (via Stock Connect) hold 17.4% of the company's free float, while active mutual funds hold only 2.7%, suggesting the stock is not primarily driven by active fund managers [45] - The company's stable dividend yield is increasingly seen as a key driver of its stock price, with investors focusing on the required rate of return rather than short-term earnings fluctuations [40][41]