Zhitong Finance and Economics APP learned that Bocom International has released a research report stating that it maintains a "buy" rating on Jingneng Clean Energy (00579), and in order to better reflect the company's profit growth trend, it has moved the company's valuation benchmark to 2025, maintaining a valuation of 5.2 times annual earnings rate (five-year historical average). The target price has been raised to HKD 2.5 (previously HKD 2.1). Currently, the company's 7.0% dividend yield is still the highest among power operator sub-sectors, which supports the company's valuation. At the same time, with the recent improvement in the company's trading volume, the bank believes this will help the company's future inclusion in the Hong Kong stock connect. Compared with the power reform, the bank believes that the company's plan to accelerate the addition of new installed capacity should bring greater bullishness. The factor that 2024 profit will remain unchanged due to the adjustment of gas and electricity prices should be widely understood by the market. The bank believes that the company's profitability will return to a growth trend in 2025.

Bocom International's main points are as follows:

The wind/solar power generation volume in the first half of the year is consistent with the industry's situation.

Due to the company's failure to disclose monthly operating data, the bank has recently updated the operating conditions with the company. At present, the bank expects the company's wind/solar utilization hours from the beginning of the year to be similar to those of other peers, that is, there is still a greater chance of a year-on-year decline in the mid-single digits in the first half of the year. The bank's original expectation that the increase of utilization hours brought about by the company's project fine-tuning should now be basically offset. Therefore, the bank has lowered its forecast for the company's 2024/25 power generation by about 1%/2% to reflect the current conservative power generation expectations.

There is still a strong possibility of a breakthrough in wind/solar installation volume in 2024.

Although the power generation may be slightly lower than expected, the bank believes that the company's target of achieving 2.7 gigawatts of new wind/solar installations this year should be achieved on schedule (compared to 0.8 gigawatts of new installations for the company in 2023), which will drive profit growth in 2025. The company has 1.69 gigawatts of wind/solar in trial operation in the first quarter of this year. The company previously stated that this part of the installation will likely begin formal operation in the second and third quarters of this year. Based on the company's stock-based incentive goals, the bank still maintains its forecast of 4.2 gigawatts of new wind/solar installations per year for the company in 2025/26, and the company believes that this goal will depend on the utilization level of the company's projects in 2024.

Slightly lower the forecast for profitability in 2024-25, dividends should be maintained in the next two years.

Due to the bank's adjustment of its forecast for wind/solar utilization hours and operating costs, the bank has lowered its profit forecast for 2024/25 by 0.3%/0.7%. The company's dividend ratio in 2023 was 38% (currently the dividend yield for 2024/25 is 7%). It is expected that under the premise of further accelerating the installation of wind/solar in 2024-26, the company is more likely to maintain a dividend of RMB 0.14 unchanged. The bank believes that the management has always attached importance to shareholder returns, and may moderately increase the per-share dividend in response to the degree of improvement in cash flow.