Description of the event
The company issued a voluntary announcement: From the date of the announcement until June 3, 2024, China Power Investment Corporation, the controlling shareholder of the company, continued to increase its holdings of the company's shares in the open market, for a total amount not exceeding HK$2 billion.
Incident comments
Shareholders increased their holdings again, demonstrating confidence in development. In fact, from November 1, 2022 to the announcement date, China Power Investment Corporation, the controlling shareholder of the company, has purchased a total of more than 346,395,000 shares of the company on the open market through concerted actors (a subsidiary of China Power Investment Corporation), increasing its share capital to 2.80% of the company's total share capital. Up to now, the controlling shareholders hold 62.82% of the company's shares. Since this year, the company's valuation has also continued to be under pressure due to weak market conditions. As of October 25, the company's PE (TTM) valuation had fallen back to only 9.29 times, and PB was only 0.62 times.
Contrary to valuations that have continued to decline, the performance of the company's coal power and new energy businesses has increased significantly since this year. The thermal power business achieved net profit of 562 million yuan in the first half of the year, an increase of 151.25% over the previous year; the net profit of the wind power and photovoltaic business also increased 69.70% and 21.69%, respectively. Driven by many businesses entering a recovery period, the company achieved profit attributable to equity holders of 1.85 billion yuan in the first half of the year, an increase of 117.64% over the previous year. In the context of continued restoration of the company's fundamentals, the controlling shareholders continued to increase their holdings of the company on a large scale, expressing full support for the company's strategic development and transformation from a traditional power generation company to a leading green and low-carbon energy supplier. More importantly, they intend to strengthen the company's position as its flagship listed subsidiary for clean energy, demonstrating the controlling shareholders' long-term commitment to the company and firm confidence in the company's prospects.
The 14th Five-Year Plan is ambitious, and the company has entered a period of rapid growth. The company previously proposed a strategic target of more than 90% of clean energy installations in 2025. Assuming that the company will retain only 8 million kilowatts of coal power at the end of 2025, the company will still need to add about 51.48 million kilowatts of clean energy installations in 2023-2025. However, the company's acquisition of the Group's 9.2683 million kilowatts of new energy assets in the first half of the year once again demonstrated the company's leading position as the group's new energy platform. As the world's largest clean energy power generation group, in the context of the State Assets Administration Commission encouraging mergers, acquisitions and restructuring of central enterprises, the Group's asset securitization is expected to accelerate in the future. We continue to be optimistic about the value enhancement and investment opportunities brought about by the rapid growth of the company's new energy business during the “14th Five-Year Plan” period.
Investment recommendations and valuation: We expect 2023-2025 results to be 4.422 billion, 5.644 billion, and 6.655 billion yuan respectively. The corresponding EPS is 0.36 yuan, 0.46 yuan and 0.54 yuan, respectively, and the corresponding PE is 7.06 times, 5.53 times and 4.69 times, respectively. Maintain the company's “buy” rating.
Risk warning
1. The risk that the progress and benefits of the commissioning of new construction projects fall short of expectations;
2. Wind conditions and lighting resources fall short of expected risks.