Core Viewpoint - China Electric Power Holdings reported a revenue of HKD 42.854 billion for 1H25, a year-on-year decrease of 2.8%, but the net profit attributable to shareholders was HKD 5.624 billion, exceeding expectations due to gains from the sale of a 50% stake in the Wooreen energy storage project in Australia [1] Group 1: Financial Performance - Operating profit for 1H25 was HKD 5.192 billion, down 11.3% year-on-year [1] - The operating profit in Hong Kong increased by 8% year-on-year, despite a 1.7% decrease in electricity sales [1] - The operating profit in mainland China decreased by 13% due to pressure on electricity prices and increased curtailment rates in renewable energy projects [1] Group 2: Regional Performance - Australia’s operating profit fell by 86% due to intense competition in retail and maintenance issues at power plants [1] - India’s operating profit decreased by 61% primarily due to tariff adjustments and impairments in the KMTL transmission project [1] Group 3: Zero-Carbon Projects - The company is expanding its zero-carbon project portfolio, with 336 MW of renewable energy capacity commissioned in mainland China and the full commissioning of the Sidhpur wind farm in India [2] - By 2029, the company aims to achieve approximately 6 GW of renewable energy capacity in mainland China and 8 GW in India [2] - The successful implementation of zero-carbon plans is expected to inject growth potential into the company's performance [2] Group 4: Cash Flow and Dividends - Operating cash flow for 1H25 was HKD 7.1 billion, down 11.3% year-on-year, while free cash flow turned positive at HKD 0.1 billion [2] - The company maintained a dividend of HKD 1.26 per share for 1H25, indicating potential for future dividend increases [2] - Total liquidity reached HKD 29.6 billion, including undrawn bank loan facilities of HKD 26.6 billion [2] Group 5: Future Outlook and Target Price - The target price is set at HKD 78.40, maintaining a "Buy" rating despite adjustments in revenue forecasts for various regions [2] - The company expects net profits of HKD 10.670 billion, HKD 11.396 billion, and HKD 12.128 billion for 2025-2027, reflecting a year-on-year decline of 9.1% in 2025 [2] - The projected EPS and BPS for 2025 are HKD 4.22 and HKD 42.26, respectively [2]

Core Viewpoint - The company is focusing on both stable and growth-oriented businesses, with expectations of profit contributions from regulated operations and potential growth from zero-carbon projects [1][2]. Stable Business - In Q1, electricity sales in Hong Kong decreased by 2.6% year-on-year to 7.091 billion kWh, influenced by weather conditions and the leap year in 2024 [1]. - The company anticipates steady profit contributions as capital investments solidify, with a projected capital expenditure of HKD 52.9 billion from 2024 to 2028 [1]. - The nuclear power business saw increased generation due to reduced downtime, while the average electricity price from the Yangjiang Nuclear Power Station declined as market trading increased [1]. Growth Business - The company is expanding its zero-carbon asset portfolio, with projects in China and India successfully launched in Q1, including a 150 MW wind project in Guangxi and a 251 MW wind farm in India [2]. - From 2024 to 2029, the company plans to double its renewable energy capacity in mainland China from approximately 3 GW to 6 GW, and increase its renewable energy and storage capacity in India from 2.3 GW to 8 GW [2]. - The Australian storage project is set to grow from 0.1 GW to 1.6 GW, with renewable energy projects increasing from 0.9 GW to 3 GW [2]. Dividend Policy - The company has maintained its dividend per share since 1987, with a proposed interim dividend of HKD 0.63 per share for 2025, unchanged from the previous year [2]. - The total liquidity as of the end of 2024 is projected to reach HKD 36 billion, indicating potential for future dividend increases [2]. Profit Forecast and Valuation - The company maintains its net profit forecast for 2025-2027 at HKD 12.1 billion, HKD 12.4 billion, and HKD 13.0 billion, respectively, with an EPS of HKD 4.79 for 2025 [3]. - The target price is set at HKD 79.37, based on a price-to-book ratio of 1.85x for 2025, which is above the three-year historical average of 1.51x [3].

Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of HKD 79.37 [8][9]. Core Views - The company is positioned as a value stock that combines stability and growth potential, with a focus on both stable and growth-oriented business segments [1]. - The stable business segment is expected to see profit contributions gradually increase due to solid capital investments, despite a slight decline in electricity prices at the Yangjiang Nuclear Power Station [2]. - The growth segment is driven by the successful launch of multiple zero-carbon projects in mainland China and India, which are anticipated to inject growth potential into the company's performance [3]. Summary by Sections Stable Business - In Q1, electricity sales in Hong Kong decreased by 2.6% year-on-year to 7.091 billion kWh, influenced by weather conditions and the leap year in 2024. However, the company remains optimistic about profit contributions from regulated businesses due to a guaranteed profit margin of 8% on fixed assets [2]. - The nuclear power business showed stable performance with increased generation at the Daya Bay Nuclear Power Station, while the Yangjiang Nuclear Power Station maintained stable output despite a slight decrease in average electricity prices due to increased market trading [2]. Growth Business - The company's zero-carbon asset portfolio is expanding, with projects such as the 150MW wind farm in Guangxi and the 90MW solar project in Jiangsu successfully launched in Q1. The investment plan for zero-carbon projects aims to double renewable energy capacity in mainland China from approximately 3GW to 6GW by 2029 [3]. - In India, renewable energy and transmission capacity are expected to triple from approximately 2.3GW to 8GW, while Australia's storage projects are projected to grow from 0.1GW to 1.6GW [3]. Dividend and Financial Outlook - The company has consistently maintained its dividend since 1987, with a proposed interim dividend of HKD 0.63 per share for 2025, reflecting a stable dividend policy and a potential for future increases [4]. - The forecast for net profit attributable to shareholders is set at HKD 121 million for 2025, with an EPS of HKD 4.79. The target price reflects a price-to-book ratio of 1.85x for 2025, which is above the historical average [5].

Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 79.37 [8][9]. Core Views - The company is positioned as a value stock that combines stability and growth potential, with a focus on both stable and growth-oriented businesses [1]. - The stable business segment is expected to see steady profit contributions as capital investments solidify, despite a slight decline in electricity prices at the Yangjiang Nuclear Power Station [2]. - The growth segment is driven by successful launches of zero-carbon projects in mainland China and India, which are anticipated to inject growth potential into the company's performance [3]. Summary by Relevant Sections Stable Business - In Q1, electricity sales in Hong Kong decreased by 2.6% year-on-year to 7.091 billion kWh, influenced by weather and the leap year in 2024. However, the company remains optimistic about profit contributions due to a regulated profit margin of 8% on net fixed assets and a high certainty in capital expenditures projected at HKD 52.9 billion from 2024 to 2028 [2]. Growth Business - The company has expanded its zero-carbon asset portfolio, with projects such as the 150MW wind farm in Guangxi and the 90MW solar project in Jiangsu successfully launched in Q1. The investment plan for zero-carbon projects aims to double renewable energy capacity in mainland China from approximately 3GW to 6GW by 2029, and increase renewable energy and storage capacity in India and Australia significantly [3]. Dividend and Financial Outlook - The company has maintained its dividend per share since 1987, with a proposed interim dividend of HKD 0.63 per share for 2025, consistent with the previous year. The total liquidity is projected to reach HKD 36 billion by the end of 2024, indicating potential for future dividend increases [4]. - The profit forecast for the company estimates net profits of HKD 12.1 billion for 2025, with an EPS of HKD 4.79. The target price reflects a PB ratio of 1.85x for 2025, which is above the historical average of 1.51x, indicating confidence in future earnings growth and dividend enhancement [5].