Incident: The company recently released the “2024 Plan for Issuing A-Shares to Specific Targets”, “Shareholders' Dividend Return Plan for the Next Three Years (2024-2026)”, and “Notice on Pouring the First Tank of Concrete on Nuclear Island by Unit 2 of the Xudabao Nuclear Power Plant in Liaoning”.
Comment: The investment in social security highlights the long-term investment value of the company. The number of shares the company plans to issue is 1,643,192,488 shares, accounting for 8.7% of the current total share capital. The issuance targets are the controlling shareholder CNNC Group and the strategic investor Social Security Foundation. Among them, the proposed subscription amount for CNNC is 2 billion yuan, and the proposed subscription amount for the Social Security Foundation is 12 billion yuan. After the issuance was completed, the combined share ratio of the company's shares held by CNNC Group and its co-actors fell from 59.76% to 56.12%, and the Social Security Foundation's direct shareholding ratio of the company was 6.86%. The fund-raising projects are all nuclear power projects, including 8 nuclear power units under construction and proposed. The capital raised accounts for 7.6% of the total investment amount of the project. As a typical long-term capital and patient capital, social security funds select companies for strategic investments, demonstrating the company's long-term investment value. According to estimates, considering diluted immediate returns, if net profit to mother increases 10% year on year in 2024, EPS will increase by 8.5% year on year after release, but from a long-term perspective, fixed increase projects will help improve EPS after production is scheduled.
The growth and certainty of the company's nuclear power installations is remarkable. On July 17, 2024, the Xudabao2 nuclear power project, one of the fund-raising projects, poured the first tank of concrete (FCD) on the nuclear island. The number of nuclear power units under construction by the company reached 12, and the installed capacity will reach 13.923 million kilowatts, accounting for 58.6% of the company's installed capacity. The approved installed capacity still accounts for 79%. Assuming that after all production is put into operation in 2029, the combined growth rate of nuclear power equipment will reach 10.1%. Assuming that the company starts production of 5 1.2 million kilowatt units per year in 2030 and later, the installed growth rate of nuclear power equity in 2030 is 14.2%. The growth and certainty of the company's nuclear power installation is remarkable, which is expected to drive a definite increase in the company's performance.
The company values shareholder returns, and dividends continue to grow. The company attaches importance to shareholder returns. Since its listing in 2015, the dividend amount and dividend per share have continued to grow every year. The dividend rate in 2023 is 34.7%, and the dividend per share is 0.195 yuan. The company recently released the “Shareholder Dividend Return Plan for the Next Three Years (2024-2026)”, which plans to distribute profits in cash every year of no less than 30% of the distributable profit achieved in the current year. The company's CFO in 2023 was 43.1 billion, with monetary capital of 17.9 billion yuan at the end of 23Q1, and completed dividends of 3.7 billion yuan in July 2024, accounting for a low proportion of CFO and monetary capital. It is expected that the company's large capital expenses will have little impact on the company's dividends, and dividends may continue to grow.
Profit forecast: In 2024-2026, the company's revenue is expected to be 79.3/86.8/92.3 billion yuan, net profit to mother of 11.4/12.6/13.5 billion yuan, EPS 0.60/0.67/0.71 yuan, corresponding to PE 19.89/18.02/16.84 times PE, maintaining the “buy” rating.
Risk warning: Utilization hours and electricity prices fall short of expectations, progress of approved projects under construction falls short of expectations, and profit forecasts and valuation models fall short of expectations.