CYPC(SH:600900)2025-09-03 13:23Summary of China Yangtze Power Co. Conference Call Company Overview - Company: China Yangtze Power Co. (CYPC) - Industry: Utilities, specifically hydropower generation - Market Cap: Rmb687,312 million - Stock Rating: Overweight - Price Target: Rmb34.79, representing a 24% upside from the current price of Rmb28.09 as of August 29, 2025 Key Financial Highlights - 1H25 Net Profit: Rmb13.06 billion, up 14.9% year-over-year (yoy), exceeding preliminary results by 0.6% [2][6] - 1H25 Revenue: Rmb36.7 billion, up 5.3% yoy, slightly above preliminary results by 0.3% [2][6] - Power Generation: Increased by 5.0% yoy, aligning with revenue growth, indicating stable average power tariffs [2] - Finance Costs: Decreased by 14.0% yoy to Rmb4.9 billion in 1H25, contributing to profit growth [2][6] - Investment Income: Rmb2.6 billion, down 10.5% yoy [2] - Capital Expenditures (Capex): Rose significantly by 74.3% yoy to Rmb6.2 billion in 1H25 [2] Quarterly Performance - 2Q25 Net Profit: Rmb7.9 billion, up 6.4% yoy [3] - 2Q25 Revenue: Rmb19.7 billion, up 2.6% yoy [3] - Finance Costs in 2Q25: Fell by 14.9% yoy to Rmb2.38 billion [3] Operational Insights - Power Generation in 2Q25: Totaled 69 billion kWh, with Three Gorges' generation down 12.4% and hydro resources down 18.5% yoy [6] - Hydropower Generation Growth: 1.6% yoy increase noted in 2Q25 [6] Valuation and Risks - Valuation Methodology: Based on discounted cash flow (DCF) with a weighted average cost of capital (WACC) of 6.7% and no terminal growth assumption [7] - Upside Risks: Include better-than-expected hydropower resources, dividend payout ratios, utilization hours, and renewable energy capacity expansion [8] - Downside Risks: Include weaker hydropower resources, lower dividend payout ratios, and lower renewable energy capacity expansion [9] Future Projections - EPS Estimates: Expected to grow from Rmb1.33 in FY24 to Rmb1.66 in FY27 [4] - Revenue Growth: Projected to increase from Rmb84.49 billion in FY24 to Rmb94.40 billion in FY27 [4] - EBITDA Growth: Expected to rise from Rmb64.18 billion in FY24 to Rmb72.56 billion in FY27 [4] Conclusion - CYPC demonstrates robust earnings growth driven by increased power generation and reduced finance costs, with a positive outlook supported by strategic capital investments and stable revenue growth. The company is well-positioned within the utilities sector, particularly in hydropower, with a favorable risk-reward profile for investors.