Investment Rating - The report maintains a rating of "Buy" for Huaneng International [3] Core Views - Huaneng International's Q3 performance exceeded expectations, with a net profit of 14.841 billion yuan, a year-on-year increase of 42.52%, primarily due to declining fuel costs [6][12] - The company's coal power generation volume decreased, but profitability per kilowatt-hour improved, with coal power segment profits totaling 13.268 billion yuan in the first three quarters [6][12] - The renewable energy segment showed high growth, with solar power generation increasing by 45.41% year-on-year in Q3 [6][12] - The company is expected to benefit from lower coal prices and stable two-part electricity pricing, leading to continued high growth in coal power performance [6][12] Financial Data and Valuation - For 2025, the expected net profit is projected at 14.313 billion yuan, representing a year-on-year growth of 41% [6][12] - The current stock price is 7.73 yuan, with corresponding PE ratios of 8.5x for 2025, 8.0x for 2026, and 7.6x for 2027 [3][8] - The company reported total revenue of 1729.75 billion yuan for the first three quarters of 2025, a decrease of 6.19% year-on-year [6][12] - The average on-grid electricity price for the first three quarters was 478.71 yuan per megawatt-hour, down 3.54% year-on-year [6][12]

01 抽水蓄能行业，传出重磅消息。 近日，国家电网新源控股有限公司（下称"国网新源"）增资扩股项目在北京产权交易所签约。本次募资 金额达到365亿元，创下国资产权交易现金募资规模之最，同时也是国内2025迄今最大一笔私募股权投 资。 本次投资阵容也颇为"豪华"，中国石油、中国人保、皖能集团、农银投资、交银投资、中银资产、中信 金融资产、海港人寿、皖能资本、川投资本等大型央国企和金融机构均参与增资。 值得注意的是，国网新源增资扩股项目正式签约的消息披露后，国家电网新事业部国网抽蓄事业部也在 近日正式成立运行。 据"电网头条"消息，国家电网在7月24日召开的2025年下半年重点工作推进会后，国家电网各单位认真 落实会议部署推进下半年工作，其中便包括"国网抽蓄事业部（新源集团、新源控股）"。 "我国抽水蓄能经历了消化吸收到国产化替代的转变。"国网抽蓄事业部（新源集团、新源控股）主任 （董事长）郭炬近日在接受《中国电力报》专访时曾表示。事实上，我国抽水蓄能领域规模化投产和运 营实践时间较短，早期相关技术研究未起步时，设备全部依靠进口，但价格高昂，且关键部件的供货周 期有时需要3至6个月。 2003年，国家电网和各有关 ...

Investment Rating - The report initiates coverage with an "Accumulate" investment rating for China Resources Power (00836.HK) [1][6]. Core Views - China Resources Power has a strong foundation in high-quality thermal power assets and robust operational management capabilities. The company is well-positioned in the renewable energy sector, with significant growth expected during the 14th Five-Year Plan period. The planned spin-off of China Resources New Energy for A-share listing is anticipated to alleviate capital expenditure pressures [1][6]. Financial Data and Valuation - The company’s main revenue is projected to grow from HKD 103.33 billion in 2023 to HKD 121.67 billion by 2027, with a compound annual growth rate (CAGR) of approximately 7% [2]. - Operating profit is expected to increase from HKD 19.75 billion in 2023 to HKD 22.47 billion in 2027, reflecting a CAGR of about 5% [2]. - Net profit is forecasted to rise from HKD 11.00 billion in 2023 to HKD 16.08 billion in 2027, with a CAGR of around 4% [2]. - Earnings per share (EPS) is anticipated to grow from HKD 2.29 in 2023 to HKD 3.32 in 2027 [2]. Company Overview - China Resources Power is the only power platform under China Resources Group, with a diversified energy portfolio including thermal, wind, solar, and hydro power. As of the end of 2024, the company’s total installed capacity reached 72.43 GW, with thermal power accounting for 53%, wind power 33%, solar power 13%, and hydro power 1% [6][12]. - The company has a strong presence in economically developed regions, with 27.25% of its capacity located in Central China and 23.72% in Eastern China [12][13]. Operational Efficiency - The company’s thermal power plants are strategically located in regions with high electricity demand, leading to higher utilization hours compared to national averages. The average utilization hours for coal-fired power plants were 4,731 in 2022, 4,688 in 2023, and 4,625 in 2024 [6][22]. - The company has successfully reduced fuel costs, with the unit fuel cost decreasing from HKD 0.339/kWh in 2022 to HKD 0.276/kWh in 2024 [6][22]. Renewable Energy Growth - The company plans to add 10 GW of new renewable energy capacity and 6.09 GW of coal power by 2025, aiming for renewable energy to constitute 50% of its total installed capacity [6][22]. - The renewable energy segment has become a significant contributor to profits, with net profit from renewable sources reaching HKD 90.29 billion in 2024, accounting for 62.8% of the company’s total net profit [6][22]. Capital Expenditure and Financial Health - The company’s capital expenditure for 2024 is projected to be HKD 534.33 billion, with 70.5% allocated to renewable energy projects [6][42]. - The debt-to-asset ratio is expected to remain relatively low at 67% by the end of 2024, indicating a stable financial position [6][42]. Dividend Policy - The company has maintained a stable dividend payout ratio above 40% over the past five years, with a dividend of HKD 1.415 per share in 2023, reflecting a growth of 141.47% year-on-year [6][44].

Core Viewpoint - The rapid growth of renewable energy enhances the demand for peak regulation in the power system, highlighting the cost and lifespan advantages of pumped storage investment. The implementation of a two-part electricity pricing system clarifies the cost recovery model, ensuring reasonable investment returns. The development of the electricity spot market and auxiliary service market is expected to further increase project revenues, making pumped storage power stations attractive to investors [1][19]. Group 1: Industry Overview - Pumped storage is currently the most mature energy storage technology, suitable for large-scale scheduling in the power system, providing peak shaving, frequency regulation, and energy storage functions, which facilitate the consumption of renewable energy [2]. - The historical development of pumped storage in China began in the 1960s, with significant growth in installed capacity during the 1990s and 2000s. However, the installed capacity growth during the "12th" and "13th" Five-Year Plans fell short of national targets due to low reasonable return rates under the previous electricity pricing mechanism [6][7]. Group 2: Development Opportunities - The increasing share of renewable energy in the power system has led to greater peak regulation pressure, while the construction of flexible regulation power sources has lagged. This has renewed attention on pumped storage as a key adjustment power source, with government departments proposing ambitious development targets and project lists [9]. - It is projected that by the end of 2025 and 2030, the cumulative installed capacity of pumped storage will reach 73 GW and 155 GW, respectively, with corresponding growth rates of 18.3% and 16.2% during the "14th" and "15th" Five-Year Plans [9]. Group 3: Investment Returns - The comprehensive implementation of a two-part electricity pricing system ensures that the initial investment and ongoing operational costs of pumped storage power stations can be recovered, providing stable returns for investors. The ongoing development of the electricity spot market and auxiliary service market is expected to enhance revenue through price differentials and participation in auxiliary services [19]. - Simulations indicate that as the additional profit per kWh from the spot market increases, the internal rate of return (IRR) for equity will rise significantly, demonstrating strong return potential [19][21]. Group 4: Industry Landscape - The early limitations in policy and profitability have resulted in the majority of existing pumped storage power stations being operated by State Grid and Southern Grid. Looking ahead, these entities are expected to lead the industry, with ambitious targets for installed capacity by 2030 [25][27]. - The central enterprises are becoming significant players in the pumped storage sector, with approximately 40% of the approved project scale during the "14th" Five-Year Plan, leveraging their financial strength and experience in large-scale power station development [25].