维持“增持”评级：维持 2024~2026年EPS 1.43/1.51/1.60 元。考虑公司作为水电龙头且分红比例较高的估值溢价，给予2024 年24 倍PE，上调目标价至34.32 元（我们预计公司2024E 每股分红约1.0元，34.32 元目标价对应2024E 股息率约为2.9%），维持“增持”评级。Introduction to this report:
The high increase in 2Q24's electricity volume is driving performance growth. We expect that the company's 3Q24E electricity capacity may continue to improve.
Key points of investment:
Maintain the “Overweight” rating: Maintain the 2024-2026 EPS 1.43/1.51/1.60 yuan. Considering the valuation premium of the company as a hydropower leader with a high dividend ratio, the target price was raised 24 times PE in 2024 to 34.32 yuan (we expect the company's 2024E dividend to be about 1.0 yuan per share, and the target price of 34.32 yuan corresponds to a 2024E dividend rate of about 2.9%) to maintain the “increase” rating.
The 2Q24 results were generally in line with expectations. The company's 1H24 revenue was 34.8 billion yuan, +12.4% YoY; net profit to mother was 11.4 billion yuan, +27.9% YoY. The company's 2Q24 revenue was 19.2 billion yuan, +23.0% YoY; net profit to mother was 7.4 billion yuan, +40.4% YoY, which is basically in line with our previous expectations.
Q2 High electricity consumption led to performance growth, and joint venture investment income continued to grow. The company's high performance in 2Q24 mainly benefited from a sharp year-on-year increase in power generation: it was announced that domestic hydropower generation capacity in 2Q24 was 67.9 billion kilowatt-hours, +42.5% over the same period last year. We estimate that the company's sharp increase in power generation in 2Q24 mainly benefited from the year-on-year abundance of incoming water from the Yangtze River Basin: the total amount of incoming water from the Wudongde/Three Gorges Reservoir in 2Q24 was about 21.8/98.2 billion cubic meters, which was 11.4%/36.9% year-on-year increase. 2Q24's financial expenses were 2.8 billion yuan, -0.35 billion yuan year-on-year. The 2Q24 company's net investment income was 1.99 billion yuan, -4.3% year over year; of these, the joint venture's investment income was 1.67 billion yuan, +7.3% year over year. We estimate that the decline in the company's 2Q24 investment income was mainly due to a decrease in asset disposal income (the total investment income obtained by 1H24 from disposing of long-term equity investors and other non-current financial assets was 0.03 billion yuan, -0.17 billion yuan year on year). We expect the company's 3Q24E electricity capacity to continue to grow: we estimate that the average daily outbound flow of the Three Gorges Reservoir from July to August 2024 was 23,866 m3/s, +59.6% over the same period last year.
Investors are demanding lower returns, and the time is right to reshape the company's valuation system. We believe that the steady increase in the total amount of the company's cash dividends is invaluable. Against the backdrop of declining returns required by investors, the relative value of the company's stable dividends is expected to increase. Currently, the risk-free interest rate is still on a downward channel (as of August 30, 2024, the yield on 30-year Chinese Treasury bonds is 2.37%, 47.7 bps compared to the beginning of 2024), and we believe there is still room for investors to decline in the “required dividend rate” of the company.
Risk warning: Incoming water falls short of expectations, electricity prices fall short of expectations, investment returns fall short of expectations, etc.
