Description of the event

The company issued an announcement on the completion of power generation in the first half of 2024 and a targeted increase announcement: in the first half of 2024, the company completed a cumulative commercial power generation capacity of 105.295 billion kilowatt-hours, an increase of 4.43% over the previous year; the feed-in power generation was 99.295 billion kilowatt-hours, an increase of 4.68% over the previous year. The company plans to issue A shares to CNNC and the Social Security Foundation. CNNC plans to subscribe for 2 billion yuan, and the Social Security Foundation plans to subscribe for 12 billion yuan.

Incident comments

The first increase in social security standards shows the company's long-term excellent value. The company announced that it plans to issue A-shares to CNNC and the Social Security Foundation. CNNC plans to subscribe for 2 billion yuan, and the Social Security Foundation plans to subscribe for 12 billion yuan. The issue price is 80% of the average trading price of the company's shares in the 20 trading days before the pricing benchmark date, and the issue price is 8.52 yuan/share. The funds raised will be used for units 1, 2, 3, and 4 of the Xudabao Nuclear Power Plant in Liaoning, Fujian, and Unit 7 and 8 of the Jiangsu Tianwan Nuclear Power Plant. In recent years, with the growth of approved projects, the pressure on the company's capital expenditure has continued to increase. The company's total capital expenditure plan for 2024 reached 121.6 billion yuan, an increase of 57.53% over the previous year. The completion of capital raised this time is expected to meet the company's capital expenditure plan of more than 100 billion yuan, and the abundant cash flow generated by the company's excellent operating performance in recent years will effectively ease the pressure on the company's subsequent capital expenditure, taking into account capital leverage and equity ratio in affiliated nuclear power projects. Furthermore, as the earliest and most important institutional investor established in the country, the Social Security Foundation is an important long-term capital and patient capital in China. Industrial investment is an important asset category of social security foundations. Its main characteristic is that it obtains medium- to long-term absolute benefits brought about by industry growth and corporate value enhancement through appropriate abandonment of liquidity. As the first time that the Social Security Foundation has used strategic investors to participate in targeted increases for listed companies, this capital operation highlights the Social Security Foundation's affirmation of the company's long-term value and firm confidence in the company's long-term development strategy. The large participation of social security funds is expected to drive the formation of more long-term capital and patient capital, and is expected to form a solid support for the company's long-term value.

The amount of nuclear power has remained stable, and the growth rate of green electricity has slowed in the short term. In the first half of 2024, the company's controlled nuclear power units completed 89.153 billion kilowatt-hours of power generation, a year-on-year decrease of 1.24%. The main reason for the decline in electricity capacity was the Qinshan, Sanmen and Fuqing nuclear power maintenance, which led to a decrease of 3.86%, 6.04%, and 7.62% year-on-year respectively. However, the company's overall number of overhaul days decreased in the second quarter, causing the company's nuclear power generation to complete 45.479 billion kilowatt-hours in the second quarter, an increase of 0.65% over the previous year, and a growth rate of 3.78 percentage points higher than in the first quarter. In terms of new energy, as of the end of the first half of 2024, New Energy Holdings had an installed capacity of 22.3704 million kilowatts, and added 3.8545 million kilowatts of installed capacity since this year. Currently, the installed capacity includes 7.5592 million kilowatts of wind power and 14.8112 million kilowatts of photovoltaics. Thanks to new installed capacity remaining high, the total power generation capacity of new energy sources in the first half of the year was 16.142 billion kilowatt-hours, an increase of 52.87% over the previous year. Among them, the second quarter completed 8.726 billion kilowatt-hours of power generation, an increase of 46.83% over the previous year. The growth rate of power generation slowed in the second quarter, mainly due to weak incoming wind conditions in the second quarter. Overall, driven by continued growth in both new energy and nuclear power, the company completed 54.205 billion kilowatt-hours of power generation in the second quarter, an increase of 6.02% over the previous year; in the first half of the year, it completed a cumulative total of 105.295 billion kilowatt-hours of power generation, an increase of 4.43% over the previous year. Under the influence of electricity consumption maintaining steady performance, the company's performance in the first half of the year may have remained stable.

Investment advice: According to the latest operating data, we expect the company's EPS in 2024-2026 to be 0.55 yuan, 0.62 yuan, and 0.68 yuan, respectively, and the corresponding PE will be 20.31 times, 18.01 times, and 16.43 times, respectively, maintaining a “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 sunshine resources fall short of the expected risk.