Description of the event
According to the latest data from the Hong Kong Stock Exchange, CITIC Financial recently increased its asset holdings of China Electric Power. After the increase in holdings, the latest number of shares held was about 619 million shares, and the latest shareholding ratio was 5%.
Incident comments
It was first listed during the year, and its long-term value is outstanding. After CITIC Financial Assets increased its shareholding in the company, it will become the company's largest shareholder of 5% or more for the first time. This is the first time the company has been listed during the year, demonstrating its recognition of the company's value and confidence in long-term development.
In reality, not only did CITIC Financial's assets increase this time; since last year, the company's controlling shareholders have also significantly increased their holdings of the company's shares. By the end of 2023, the controlling shareholders held 63.67% of the company's shares, an increase of 2.61 percentage points over the end of 2022. The company's majority shareholders have taken turns to increase their holdings, demonstrating their firm confidence in the company's long-term development strategy. Although the company's stock price has recovered since this year, as of May 20, the company's PB (LF) valuation is still only 0.75 times, and the company's valuation is still at a low level. Moreover, from a fundamental perspective, the company's operating data since 2024 has performed excellently, and its electricity data has reached a record high in comparable caliber. According to the company's latest electricity sales announcement, in the first 4 months of 2024, the company completed total sales volume of 40.817 billion kilowatt-hours, an increase of 33.45% over the previous year, making it the highest growth rate for core listed companies under the five major power generation groups. Among them, hydropower sales reached 5.377 billion kilowatt-hours, and the year-on-year growth rate was as high as 79.64%; wind power and photovoltaic electricity sales also reached 52.10% and 88.03% respectively, and coal power maintained steady performance. Sales of 18.6 billion kilowatt-hours of electricity were completed in the first 4 months, an increase of 8.80% over the previous year. In particular, for the clean energy business with low variable costs, the rapid increase in clean energy generation will mean that clean energy performance will grow at an accelerated pace; in the thermal power business, thanks to the continuous optimization of the coal supply and demand environment, China's Q5500 Q5500 final coal liquidation price in January-April was 879.05 yuan/ton, a year-on-year decrease of 20.15%. Even considering the smoothness of Changxie coal, the company's thermal power cost pressure is expected to be significantly released, and the company's thermal power performance is expected to grow rapidly. Considering the 50% bottom line dividend promise in the company's articles of association and the company's dividend rate as high as 61.38% in 2023, the continued restoration of the company's operating performance will be a rich dividend return for the company's shareholders, which will further enhance the company's investment value. Therefore, overall, we believe that in the context of the accelerated recovery of business performance and generous dividend promises, the current investment value of the company is worth paying attention to, and the alternating increase in holdings of major shareholders will further demonstrate firm confidence in the company's long-term development.
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 the installed clean energy in 2025. Assuming that the company only retains 8 million kilowatts of coal power at the end of 2025, the company will still need to add more than 38 million kilowatts of clean energy installed in 2024-2025, and the company acquired 9.2683 million kilowatts of new energy assets in the first half of 2023, once again demonstrating the company's dominant 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 increase and investment opportunities brought about by the rapid growth of the company's new energy business during the “14th Five-Year Plan” period.
Investment advice: We expect the 2024-2026 results to be 5.05 billion yuan, 6.048 billion yuan, and 7.159 billion yuan, respectively, corresponding EPS of 0.40 yuan, 0.49 yuan and 0.58 yuan, respectively, and the corresponding PE is 8.11 times, 6.71 times, and 5.67 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.