Core Viewpoint - Yangtze Power announced its mid-year performance report for 2025 and a proposal for the expansion of the Gezhouba shipping hub, indicating a focus on enhancing operational capacity and maintaining financial stability [1][3]. Financial Performance - In Q2 2025, the company's net profit attributable to shareholders increased by 5% year-on-year to 7.8 billion yuan, aligning with expectations; the adjustment of six reservoirs helped mitigate the impact of water inflow fluctuations [2]. - The company experienced a decrease in water inflow by 18% year-on-year, but power generation increased by 1.6% due to the performance of specific power stations, with revenue rising by 2% to 19.6 billion yuan [2]. Investment and Expansion Plans - The company plans to invest 26.6 billion yuan from its own funds to expand the Gezhouba shipping hub, with an average annual capital expenditure of about 4 billion yuan over a construction period of 91 months [3]. - The expansion aims to enhance social and economic benefits, increasing annual power generation from approximately 15.8 billion kWh to 18 billion kWh, thereby reducing the constraints on power dispatch caused by shipping operations [3]. Cash Flow and Dividend Policy - In 2024, the company's operating cash flow is projected to reach 59.6 billion yuan, with free cash flow at 45.2 billion yuan, allowing for a dividend payout of 23.1 billion yuan, resulting in a dividend rate of 71% [3]. - The company maintains a long-term dividend payout target of 70%, indicating strong cash flow capabilities to support this goal despite the new investment [3]. Profit Forecast and Valuation - The profit forecasts for 2025 and 2026 have been adjusted upwards by 2.8% and 3% to 34.1 billion yuan and 35.2 billion yuan, respectively, with year-on-year growth of 5% and 3% [4]. - The target price remains unchanged at 31.5 yuan, with a potential upside of 9.8% from the current stock price, reflecting a price-to-earnings ratio of 20.6x for the current price and 22.6x for the target price [4].

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company has shown steady growth in power generation, with a significant improvement in financial expenses [8][10] - The company aims to achieve a power generation target of 300 billion kWh in 2025, supported by favorable water resource conditions [10][15] - The company has increased its market-oriented trading volume, which is expected to enhance revenue and pricing [13][14] Summary by Relevant Sections Financial Performance - In 2024, the company achieved total revenue of 84,492 million yuan, a year-on-year increase of 8.12%, and a net profit attributable to shareholders of 32,496 million yuan, up 19.28% [9][10] - For Q1 2025, the company reported revenue of 17,015 million yuan, a growth of 8.68%, and a net profit of 5,181 million yuan, reflecting a 30.56% increase [9][10] - The company's financial expenses decreased significantly, contributing to higher profit growth rates compared to revenue growth [10][12] Operational Highlights - The total installed capacity of hydropower is 71,795 MW, with domestic hydropower accounting for 16.45% of the national total [10] - The company’s six hydropower stations generated 295.904 billion kWh in 2024, a 7.11% increase year-on-year [10][12] - The company has successfully implemented market-oriented pricing strategies, with the proportion of market transactions rising to 38.6% in 2024 [13][14] Future Outlook - The company has revised its profit forecasts for 2025-2027, projecting net profits of 35,028 million yuan, 36,715 million yuan, and 37,087 million yuan respectively, with growth rates of 7.8%, 4.8%, and 1.0% [15] - The expected dividend payout ratio for 2025 is 70%, translating to a dividend yield of 3.4% [15]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company has shown steady growth in power generation, with financial expenses continuously improving. In 2024, the company achieved a total revenue of 84.49 billion yuan, a year-on-year increase of 8.12%, and a net profit attributable to shareholders of 32.50 billion yuan, a year-on-year increase of 19.28% [8][10] - The company aims to achieve a power generation target of 300 billion kWh in 2025, supported by favorable water resource conditions and improved market pricing [15] Summary by Relevant Sections Financial Performance - In 2024, the company reported total revenue of 84.49 billion yuan, up 8.12% year-on-year, and a net profit of 32.50 billion yuan, up 19.28% year-on-year. The first quarter of 2025 saw revenue of 17.02 billion yuan, a growth of 8.68%, and a net profit of 5.18 billion yuan, a growth of 30.56% [9][10] - The company's total installed hydropower capacity is 71.795 million kW, accounting for 16.45% of the national hydropower capacity. The six major hydropower stations generated 295.90 billion kWh in 2024, a year-on-year increase of 7.11% [10][12] Market Dynamics - The company has increased its market-based trading volume to 38.6% in 2024, up from 37.8% in 2023, with an average on-grid electricity price of 285.52 yuan/MWh, an increase of 4.24 yuan/MWh year-on-year [13][14] - The company is actively engaging in market-oriented pricing mechanisms, which are expected to enhance its competitive advantage in the clean energy sector [13] Profit Forecast and Valuation - The profit forecast for the company has been adjusted upwards, with net profit estimates for 2025, 2026, and 2027 set at 35.03 billion yuan, 36.72 billion yuan, and 37.09 billion yuan respectively, reflecting year-on-year growth rates of 7.8%, 4.8%, and 1.0% [15] - The current price-to-earnings ratio (P/E) is projected at 20.6 for 2025, with a dividend yield of 3.4% based on a 70% payout ratio [15]