The company is a listed company under China Power Investment Group whose main business is energy and finance. The main business includes two major business segments, energy and finance, with wholly-owned subsidiaries Dongfang Green Energy and Capital Holdings as management entities respectively.

The company's energy business mainly includes cogeneration thermal power and wind and solar new energy; financial business includes trust, insurance brokerage, and futures business. In the first half of 2024, the company achieved operating income of 2.769 billion yuan, a year-on-year decrease of 5.03%, and achieved net profit of 0.53 billion yuan, a year-on-year decrease of 10.28%, and net profit of 0.515 billion yuan after deducting non-post-return net profit of 0.515 billion yuan, a year-on-year decrease of 11.51%. Among them, Dongfang Green Energy's total revenue was 2.2 billion yuan and net profit was 0.376 billion yuan; Capital Holdings had total revenue of 0.186 billion yuan and net profit of 0.337 billion yuan.

Nuclear power assets are listed behind the back door, and financial assets are sold out. On September 30, the company issued a notice to plan a major asset restructuring and suspension of trading. It plans to purchase the controlling shares of China Power Investment Nuclear Energy Co., Ltd. (Power Investment Nuclear Energy for short) through the issuance of shares, while also placing the controlling shares of China Power Investment Group Capital Holdings Co., Ltd. On October 18, the company announced an asset restructuring plan. The listed company plans to replace 100% of its capital holding shares with the equivalent portion of the power investment nuclear power shares held by China Nuclear Power, and purchase the difference between the purchased assets and the assets placed out of the shares issued by China Nuclear Power and China Life Insurance. The issue price is 3.53 yuan/share, with a discount rate of 13.7%. The national nuclear power lockdown period is 36 months, and China Life Insurance's lockdown period is 12 months. At the same time, the company plans to issue a targeted increase of no more than 30% of the total share capital after the issuance of shares to be purchased for use in asset construction projects, working capital, debt repayment, etc. The issue price is yet to be determined, and the lockdown period is 6 months.

Build the third A-share listed company to operate nuclear power. If this asset restructuring is successfully completed, Power Investment Nuclear Energy will be listed through the company's back office. The company will also become the third A-share listed nuclear power company, own Haiyang Nuclear Power Holdings shares, and participate in nuclear power plants such as Hongyanhe and Sanmen. According to the calculation of China Power Investment's foreign investment in nuclear energy, the company holds the installed capacity of 2.506 million kilowatts; the holding (including joint control) is operating 8 nuclear power units, with an installed capacity of 9.21 million kilowatts; the management of China Power Investment Group Holdings approved 8 units under construction, with an installed capacity of 10.56 million kilowatts.

Risk warning: Asset restructuring has failed, electricity consumption falls short of expectations, electricity prices have been lowered.

Investment advice: First coverage, giving a “better than the market” rating.

As a “energy+finance” listed company under China Power Investment, the company's business development is steady. It plans major asset restructuring to become the third A-share listed company to operate nuclear power. We expect the company's net profit to be 1.357/1.418/1.463 billion yuan in 2024-2026, a year-on-year growth rate of 6.8%/4.5%/3.2%, corresponding to the current PE of 16.2/15.5/15.0X. Referring to the comparable company, the company was given 17.5-18 times PE. The estimated reasonable valuation is 4.41-4.54 yuan/share, with 7.9%-10.9% premium space compared to the current stock price, giving it a “superior to the market” rating.