A comprehensive energy listed company under Datang Group, one of the largest independent power generation companies in China. After 30 years of development, the company is one of the largest independent power generation companies in China. It operates the power generation business mainly in thermal power, hydropower, wind power, and photovoltaics, and was determined by Datang Group as the final integration platform for the Group's thermal power business in 2010. After the national “dual carbon” target was proposed, the company actively promoted the transformation. By the end of 2023, the company had a total installed capacity of 73.291 million kilowatts, including 45.624 million kilowatts of coal engines, 6.632 million kilowatts of gas engines, 9.205 million kilowatts of hydropower, 7.464 million kilowatts of wind power, and 4.366 million kilowatts of photovoltaics; clean energy accounts for more than 37%.

The restoration of the thermal power industry and the optimization of the electricity price structure have ushered in a revaluation of values. The share of non-fossil energy installed has continued to increase in recent years, but as a basic power source to ensure a safe and stable supply of electricity, the installed capacity has continued to grow; thermal coal prices have slowly declined after rising sharply in 2021. As of July 17, 2024, it has fallen to 715 yuan/ton. We believe that coal prices are expected to enter a downward channel, and the company's thermal power profit elasticity is expected to be released. In addition, compensation for capacity electricity prices is expected to bring the company 4.7 billion-5.1 billion in revenue in 2024. In addition to ancillary services expanding profit channels, the company's thermal power profitability is expected to increase steadily.

The company's transformation into clean energy has broad prospects, and the multi-core development of scenery+hydropower+nuclear power is driving development. In 2023, the installed scale of non-fossil energy power generation surpassed the installed scale of thermal power generation for the first time, and new energy power generation expanded rapidly. The company vigorously develops wind power and photovoltaics, which has a positive effect on the company's overall profit. The company's new wind power and photovoltaic projects are spread across resource-rich regions across the country, and development prospects are good; the company's hydropower installations are stable, mostly located in the southwest region. In addition, the company's hydropower profits are expected to increase in the context of improved incoming water; in addition, the company's participation in Ningde Nuclear Power has a relatively stable power generation capacity and is expected to continue to bring investment benefits to the company.

Investment advice and valuation: The company develops cooperatively with thermal power and new energy sources. In the context of energy transformation, future growth is high.

We expect the company's revenue from 2024 to 2026 to be 128.168 billion yuan, 133.033 billion yuan, and 139.145 billion yuan, respectively, with growth rates of 4.7%, 3.8%, and 4.6% respectively, and net profit to mother of 3.762 billion yuan, 4.248 billion yuan, and 4.797 billion yuan respectively, with growth rates of 175.6%, 12.9%, and 12.9%, respectively. The first coverage gave it a “buy” investment rating.

Risk warning: Project progress falls short of expectations; approval progress falls short of expectations; risk of falling electricity prices; policy progress falls short of expectations.