According to the Zhongtong Finance and Economics APP, Guoyuan International released a research report stating that it maintains a 'buy' rating for China Res Power (00836), with an updated target price of HK$24, equivalent to 8 times and 7.1 times the PE for 2024 and 2025, respectively, with a 30% increase in target price compared to the current price. Benefiting from the decline in coal prices, the company's thermal power profitability continued to recover throughout the year. As for wind power, short-term profitability is under pressure, but the new energy 10GW new installation guidance is maintained for the whole year.

The main viewpoints of Guoyuan Securities are as follows:

Coal prices are falling, and thermal power profitability continued to recover throughout the year:

Benefiting from the decline in coal prices, the company's fuel costs per unit in the first half of the year decreased by 10.7% year-on-year, leading to a significant recovery in the company's thermal power profitability, with a core profit contribution of HK$2.715 billion (compared to HK$0.726 billion in the first half of 2023). Considering that coal prices were already at a low level in the second half of last year, the company expects the unit fuel costs to decrease by 6%-7% in the second half of 2024; as for electricity prices, based on the mid- to long-term electricity prices in 2024, the annual mid- to long-term cooperative electricity accounts for 80% of the total, with the cooperative electricity price including a 18.5% increase in capacity electricity price compared to the benchmark electricity price, expecting the electricity price to be relatively stable in 2024. Therefore, with the downward trend in coal prices, coupled with the continuous improvement of capacity electricity prices and ancillary service policies, the profitability of the company's thermal power business will steadily increase. Subsequent focus will be on the signing of mid- to long-term cooperative electricity prices in 2025.

Short-term wind power profitability is under pressure, and the new energy 10GW new installation guidance is maintained for the whole year:

In the first half of the year, affected by factors such as unfavorable wind conditions, increasing power consumption restrictions, and a decline in the average grid electricity price, the core profit contribution of the company's renewable energy business was HK$5.556 billion (compared to HK$5.954 billion in the first half of 2023), a 6.7% decrease year-on-year; the company added 930MW of new energy grid-connected installations in the first half of the year, nearly 1.1GW by the end of July, and maintains the unchanged target of 10GW new installations for the whole year, mainly concentrated on grid connection and production in the third and fourth quarters.

Updates on key issues such as the listing of the new energy spin-off, asset impairment, and dividend distribution:

1) The company has submitted a complete set of relevant materials to the regulatory institutions for the listing of China Resources New Energy A shares and is currently waiting for the appropriate window period; 2) There are currently no significant signs of asset impairment; 3) The company will distribute an interim dividend of HKD 0.455, meeting market expectations. The annual dividend ratio of 40% will be maintained, and the dividend policy will be reviewed regularly to ensure sufficient market competitiveness.