Hydropower recovered as scheduled, and the hourly forecast for hydropower utilization was slightly raised. The company's hydropower recovery progress in April was ideal. The monthly power generation returned to the level of 2 kilowatt-hours, and the power generation in January-April increased sharply by 81% over the same period last year. According to the peak of the 2nd quarter of last year, we expect the company's hydropower generation capacity to remain at the level of April in May/June of this year. We conservatively estimate that the company's hydropower generation capacity for the 2nd quarter of 2024 will be 6 kilowatt-hours, down from about 10%/15% for the same period in 2021/2022. At the same time, we raised the annual hydropower usage hours of 2024 from 2,750 to 2,900 hours, which is still slightly below the 2020-23 average of 3,480 hours.

The annual level of wind/light utilization per hour remains to be seen. It is expected that the installed capacity of PV will still be higher than that of wind power this year. In terms of wind power generation, we previously predicted that the effect of the company fine-tuning the project to improve utilization hours may not be obvious within this year. Because in addition to the slight decline in the mainland's wind/light utilization rate from January to April this year, the company also indicated that the wind speed value for the period was lower than in the same period last year. The company's wind/photovoltaic utilization hours should drop by about 3%/9% year over year during our estimate period. Despite this, the company's wind/solar power generation surged 52%/88% year-on-year in January-April this year, and the increase was mainly contributed by mergers and acquisitions and new construction projects. Overall, we lowered our 2024 wind/light utilization hour forecast by 1% to the same level as last year. Since the wind speed was low in the 3rd quarter of last year, we need more data to determine the usage hours throughout the year. At the same time, after learning with the company, we also adjusted the proportion of the company's new wind/light installations throughout the year, from 4.5/2.5 gigawatts to 3.0/4.0 gigawatts, and maintained a forecast of 7.0 gigawatts of new installed capacity throughout the year.

The new energy consumption policy guarantees the growth in electricity sales driven by the company's new installations, and maintains purchases. Taking into account our adjustments in utilization hours and installed capacity forecasts for the wind/light/hydropower sector, we raised the company's 2024-26 earnings forecast per share by 2.2%/2.5%/0.3%. We believe that the country will speed up proposals to adjust and strengthen support for the consumption of new energy sources, which will ensure that a reasonable utilization rate can be maintained even after the new installed capacity is put into operation. The company will add more wind/light installed capacity in the future (over 7 gigawatts in the next three years), and there should be a good guarantee for the profit growth brought about by the company's increased power generation capacity. We changed our valuation benchmark to 2025, maintained the valuation of each segment, and raised the target price to HK$4.75 (previously HK$3.9) using the segment valuation method to maintain the purchase rating. Expecting a 50% dividend ratio, the 7.7% dividend rate in 2025 is still attractive.