2026-01-08 02:07Summary of Conference Call on Yalong River Hydropower Project Industry Overview - The hydropower sector typically shows good absolute returns and odds after reaching historical highs, despite current high interest margins leading to subdued performance due to market risk appetite [1][3] - The overall performance of the hydropower sector is characterized by strong cash flow, high dividends, and significant dividend yields, which tend to follow certain patterns during changes in market risk preferences and interest rates [3] Company Insights Yalong River Company - The installed capacity in the Yalong River basin is 19.2 million kW, with an additional 200,000 kW from wind and solar power. Ongoing projects total over 3.7 million kW, with expectations for a 40% increase in competitive hydropower capacity by 2030 [9][2] - The compensation benefits from the Yalong River hydropower project include issuance benefits and seasonal smoothing effects, potentially exceeding 2 billion yuan in performance if fully realized [12] - New hydropower stations are expected to contribute approximately 2.5 billion yuan in performance increments, with 8 GW of new capacity planned [12] State Power Investment Corporation (Guotou) - Guotou's growth expectations are significantly better than those of Changjiang Electric, with a long-term compound return expectation of around 10% compared to Changjiang's 3.5%-3.6% [5][16] - Guotou's installed capacity in renewable energy is projected to grow from over 3 million kW in 2020 to 9 million kW by the end of 2025 [8] Sichuan Investment Group (Chuantou) - Chuantou operates as an investment platform, with nearly 100% of profit derived from investments, primarily in the Yalong River project [6] - The company has undergone significant profit growth linked to capacity investments, with expectations for further growth due to the integration of Sichuan Investment Group and Sichuan Energy Group starting in 2025 [6][20] Financial Performance and Projections - The Dadu River project is expected to contribute approximately 1 billion yuan in performance increments during its new production window in 2025-2026 [14][15] - Chuantou's dividend policy has shifted to 0.4 yuan per share, which may lead to a decline in the dividend payout ratio to 38% by 2025, compared to Guotou's 55% [18][19] - Chuantou's current valuation is around 14 times PE, which is lower than its peers, indicating a smaller downside risk compared to Guotou [21] Future Outlook - The performance growth rate for Chuantou is expected to maintain around 6% over the next two years, driven by new unit operations and stable pricing impacts from the Yalong River project [22] - Both Guotou and Chuantou are viewed positively for future growth, with Chuantou having a stronger safety margin against downside risks [22]