Key points of investment
Event: The company announced the “2024 Plan to Issue A Shares to Specific Targets”.
A fixed increase of 14 billion yuan, social security+CNNC full cash subscription. China Nuclear Power plans to issue shares to specific targets. The total amount of capital to be raised (including issuance fees) is not more than 14 billion yuan. The distribution targets are CNNC Group, the controlling shareholder, and the social security foundation, a strategic investor. Among them, CNNC plans to subscribe for 2 billion yuan, and social security plans to subscribe for 12 billion yuan, with full cash subscription. The issue price is 8.52 yuan/share, and the number of shares to be issued is 1.643 billion shares, accounting for 8.7% of the company's total share capital before issuance. As a strategic investor and controlling shareholder, Social Security participated in the subscription, which strongly supported the company's long-term growth.
The capital raised is in place, and the certainty of growth continues to increase. The funds raised will be used for Liaoning Xudabao No. 1 and 2 (total investment of 42.2 billion yuan), Liaoning Xudabao No. 3 and 4 (total investment of 52.3 billion yuan), Fujian Zhangzhou No. 3 and No. 4 (total investment of 39.7 billion yuan), and Jiangsu Tianwan No. 7 and 8 (total investment of 50.6 billion yuan), for a total of 8 nuclear power units, with a total investment of 184.8 billion yuan. According to investment estimates, the internal return on project capital is expected to reach 9%, and the yield is high. As of December 31, 2023, the company held 25 nuclear power units in operation, with an installed capacity of 23.75 million kilowatts, 11 units under construction, with an installed capacity of 12.632 million kilowatts, 4 units to be started, with an installed capacity of 4.933 million kilowatts, and a capacity of 74% of the units/units in operation. Raise capital in place to leverage deterministic growth. Nuclear power normalization approval+sufficient reserves for ongoing projects, and the certainty of the company's growth continues to increase.
A strategic cooperation agreement was signed with social security to integrate advantages and develop together. Dingzeng introduced social security as a strategic investor. The goals of cooperation include 1) safeguarding national energy security; 2) promoting the high quality and sustainable development of listed companies; 3) promoting steady performance and reasonably increasing the cash dividend ratio; and 4) increasing the medium- to long-term capital supply in the capital market. The synergy effect is reflected in 1) social security providing continuous capital support for the clean energy business in an appropriate manner; 2) social security earnestly carries out shareholders' duties and dispatches a non-independent director to further improve governance capacity and level; 3) social security connects the company with strategic resources and promotes win-win cooperation.
The 2024-2026 shareholder dividend return plan highlights the long-term cash flow dividend value. The company achieves annual profits. If the company makes up losses according to law and has distributable profits after withdrawing the statutory provident fund or any provident fund, the company pays cash dividends. The profit distributed in cash every year is not less than 30% of the distributable profit achieved in the current year. If the subsidiary's cash dividend received in the current year is deducted after deducting the estimated capital expenses, headquarters expenses, and dividend due for the current year according to the original dividend ratio, there is still additional capital and no temporary major capital expenditure arrangement, the company will further increase the dividend payment rate on the basis of the original dividend ratio. The company values shareholder returns. Dividends are expected to continue to increase after capital expenditure peaks and free cash flow is positive.
Profit forecast and investment rating: We maintain the company's net profit of 11.4/12.5/13.6 billion yuan in 2024-2026, up 8%/10%/8%, and 2024-2026 PE 18.5/16.9/15.6 times (2024/7/12). Long-term high-quality operating assets for nuclear power, scarce and deterministic growth track, the company's ongoing projects are stable, projects under construction are being put into operation at an accelerated pace, and the “buy” rating is maintained.
Risk warning: Electricity prices fluctuate, installation progress falls short of expectations, nuclear power unit operation risks.