CHINA POWER(HK:02380)2024-06-07 02:01Investment Rating - The report assigns a "Buy" rating to the company, China Power (2380 HK), with a target price of HKD 4.75, indicating a potential upside of 27.0% from the current closing price of HKD 3.74 [1][11]. Core Views - The report highlights that new policies for renewable energy consumption are favorable for the advancement of new wind and solar projects, leading to an upward revision of the target price [1]. - Hydropower is recovering as expected, with a significant year-on-year increase in generation, and the forecast for hydropower utilization hours has been slightly raised for 2024 [1][2]. - The report anticipates that the company's new installed capacity in wind and solar will contribute positively to profit growth, supported by national policies [2]. Summary by Sections Financial Performance - Revenue is projected to grow from RMB 43,689 million in 2022 to RMB 61,756 million by 2026, with a notable increase of 16.2% expected in 2024 [3][12]. - Net profit is expected to rise significantly from RMB 2,648 million in 2022 to RMB 8,791 million in 2026, with a substantial growth rate of 73.4% in 2024 [3][12]. - Earnings per share (EPS) is forecasted to increase from RMB 0.20 in 2022 to RMB 0.68 in 2026, reflecting a strong growth trajectory [3][12]. Power Generation Forecast - The report provides a detailed forecast for power generation, with total generation expected to reach 133,468 GWh by 2026, showing a steady increase across various energy sources [6]. - Hydropower generation is expected to recover to 17,258 GWh in 2026, while wind and solar generation are projected to grow significantly, with solar expected to reach 36,877 GWh by 2026 [6]. Valuation Metrics - The report uses a sum-of-the-parts valuation approach, resulting in a target price of HKD 4.75, based on various valuation multiples for different energy segments [7]. - The projected dividend yield for 2025 is estimated at 7.7%, making the stock attractive for income-focused investors [2][11]. Installed Capacity and Utilization - The report anticipates a total installed capacity of 67,019 MW by 2026, with a significant portion coming from renewable sources [5]. - The utilization hours for wind and solar are expected to stabilize, with adjustments made to previous estimates based on recent performance data [2].