2024-04-30 03:03Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 6.92, indicating a potential upside of 22.7% from the current price of HKD 5.64 [1][9]. Core Insights - The company's Q1 profit growth was constrained by lower wind and solar electricity prices, with a year-on-year profit increase of 2%, which is below the 8.2% growth in electricity generation. The decline in electricity prices was estimated at 6% for wind and 26% for solar [1]. - The company added 562 MW of new capacity during the quarter, primarily from acquisitions, with wind and solar contributions of 26 MW and 536 MW, respectively [1]. - The management acknowledged uncertainties regarding the acquisition of parent company assets, including concerns about asset quality and financing conditions. However, the company aims to add 7.5 GW of self-built projects this year, which is expected to drive profit growth beyond 2025 [1][2]. Financial Summary - Revenue for 2023 is projected at RMB 37,638 million, a decrease of 5.6% from 2022, with a recovery expected in 2024 with a 5.1% growth [3]. - Net profit is forecasted to increase from RMB 6,355 million in 2023 to RMB 6,492 million in 2024, reflecting a 2.2% growth [3]. - The company’s earnings per share (EPS) is expected to rise from RMB 0.74 in 2023 to RMB 0.76 in 2024, with a projected dividend payout ratio of 30% [3][10]. Operational Data - The total installed capacity is expected to grow from 35,594 MW in 2023 to 42,594 MW in 2024, with significant contributions from renewable energy sources [7]. - Electricity sales are projected to increase from 76,226 million kWh in 2023 to 86,569 million kWh in 2024, indicating a growth rate of 13.6% [7]. - The company’s financial metrics show a price-to-earnings (P/E) ratio of 7.1 for 2023, which is below the historical average, suggesting potential undervaluation [3][10].