2025-11-03 02:36Summary of CGN Power Co., Ltd. Conference Call Company Overview - Company: CGN Power Co., Ltd (1816.HK) - Industry: China Utilities - Market Cap: Rmb152,398.1 million - Current Share Price: HK$3.17 - Price Target: HK$2.81 - 52-Week Range: HK$3.30 - HK$2.31 Key Financial Highlights - 3Q25 Recurring Net Profit: Down 8% YoY to Rmb2.57 billion, slightly below consensus expectations of Rmb2.6 billion [2][7] - Total Gross Profit: Decreased by 18% YoY in 3Q25, continuing the trend from 1H25 [2] - Unit Gross Profit: Rmb0.132/kWh in 3Q25, down 15% YoY [2] - Revenue: Rmb20.56 billion in 3Q25, a 7% QoQ increase but a 10% YoY decline [8] - Net Profit: Rmb2.624 billion in 3Q25, down 10% YoY [8] Tariff Policy Changes - Guangdong 2026 Power Tariff Policy: The variable cost compensation mechanism has been cancelled, which is expected to lead to a rebound in nuclear power market tariffs in Guangdong [3][7] - Impact of Tariff Changes: The cancellation of a ~4 cent discount is anticipated to positively affect CGN Power's tariff structure [3] Market Outlook - Earnings Trend: The company expects the trend of declining core earnings to continue into 4Q25, influenced by a relatively low base in 2H24 [7] - Analyst Rating: Morgan Stanley maintains an "Overweight" rating on CGN Power, with an attractive industry view [5] Risks and Opportunities - Upside Risks: Include higher-than-expected utilization, upward adjustments of on-grid tariffs, and new project approvals [11] - Downside Risks: Include lower-than-expected utilization, downward adjustments of on-grid tariffs, and delays in new project commissioning [11] Valuation Methodology - P/E Multiple: A P/E multiple of 13x is applied to the 2025E EPS, with expectations of accelerating trends in new projects compared to previous years [9] Additional Insights - Gross Margin: Decreased to 29.8% in 3Q25, down 2.8 percentage points YoY [8] - Effective Tax Rate: Increased to 18.1% in 3Q25, up 0.5 percentage points YoY [8] This summary encapsulates the key points from the conference call regarding CGN Power Co., Ltd, highlighting financial performance, tariff policy changes, market outlook, and associated risks.