CHINA POWER(HK:02380)2024-03-24 16:00Investment Rating - The report maintains a "Buy" rating for the company, China Power (2380 HK), with a target price of HKD 3.90, indicating a potential upside of 20.4% from the current price of HKD 3.24 [1][2][16]. Core Insights - The company's 2023 profit was below expectations, with a net profit of RMB 2.66 billion, a 7% year-on-year increase, but lower than market expectations by 31% and the report's expectations by 22%. This was primarily due to higher operational costs, including significant losses in the hydropower segment and increased labor costs [1][2]. - Despite the lower-than-expected profit, the company increased its dividend per share to RMB 0.132, a 20% increase year-on-year, with a payout ratio rising from 55% in 2022 to 61% in 2023 [1][2]. - The company plans to slow down its self-built projects slightly, with expected new installations of 7 GW in 2024, down from 13 GW in 2023, while maintaining a capital expenditure below RMB 30 billion [1][2]. - The management anticipates significant profit release from the wind and solar segments in 2024, with expected operating profit growth of 61% year-on-year, while the hydropower segment is expected to recover from losses [1][2]. - The report adjusts the earnings forecast for 2024 and 2025 downwards by 41% and 36%, respectively, but still expects net profit growth of 70% and 44% for those years [1][2]. Financial Summary - For the fiscal year ending December 31, 2023, the company reported revenues of RMB 44.26 billion, a slight increase of 1.3% year-on-year, with a projected revenue of RMB 51.54 billion for 2024, reflecting a growth of 16.5% [2][17]. - The net profit for 2024 is estimated to be RMB 4.94 billion, with earnings per share expected to rise to RMB 0.36, marking a significant increase of 69.6% compared to 2023 [2][17]. - The company’s market capitalization is approximately HKD 40.08 billion, with an average daily trading volume of 47.13 million shares [4][17]. Operational Insights - The company has significantly increased its renewable energy capacity, with wind power installations rising by 67.1% and solar power installations increasing by 110.2% in 2023 [6][7]. - The management aims to achieve a target of 90% clean energy capacity by the end of 2025, indicating a strategic focus on renewable energy [1][2].