Brief performance review

On the evening of October 29, the company disclosed its quarterly report for the year 24. From 1 to 3Q24, the company achieved revenue of 56.99 billion yuan, +1.6% year-on-year; net profit to mother was 8.93 billion yuan, or -4.2% year-on-year. Among them, Q3 achieved revenue of 19.55 billion yuan, or -1.3% YoY; realized net profit to mother of 3.05 billion yuan, or -7.1% YoY.

Management analysis

Increased material replacement and overhaul arrangements+minor repairs to Fuqing Unit 4 + typhoon affected nuclear power capacity; new energy installed/electricity capacity increased. 3Q24's total feed-in power was 151.12 billion kilowatt-hours, +2.9% YoY. (1) Q3 was affected by minor repairs to Fuqing Unit 4 and typhoon “Mao” on the Hainan power plant. The feed-in electricity volume for nuclear power in a single quarter was -5.6% year-on-year. As Fuqing 4 restarts and resumes operation, it is expected that the impact will gradually be eliminated. (2) As of the end of Q3, New Energy added 8.6 GW of installed capacity over the same period last year, bringing in +40.2% of feed-in power over the same period in Q3, supporting positive growth in total electricity volume.

Decrease in market-based electricity prices affects profits. After the operation of the thermal power capacity compensation mechanism, the price of nuclear power in Tianwan, Jiangsu, where market-based electricity prices rose relatively well in the early stages, adjusted somewhat. We expect that nuclear power will remain the same as a clean baseload power source. Due to its lower variable cost compared to coastal thermal power, it is expected that electricity prices will generally stabilize during the transformation process.

The entry of social security funds and the increase in the group's holdings enhance confidence. 8M24 announced that it plans to raise additional capital for the development of subsequent power plants. Among them, CNNC Group/Social Security Fund each plan to subscribe for 2/12 billion yuan. 10M24 announced the completion of the Group's current holdings increase plan, which has increased its holdings by a total of 17,775,311 shares, with an increase of 129.49 million yuan. Nuclear power CAPEX has a long cycle. Currently, the company has entered the continuous operation stage of new units, and continues to be optimistic about the company's long-term growth potential.

Profit Forecasts, Valuations, and Ratings

We expect the company to achieve net profit of 11.09/11.77/12.67 billion yuan from 2024 to 2026, and EPS of 0.59/0.62/0.67 yuan respectively, corresponding to PE of 18 times, 17 times, and 15 times, respectively, maintaining a “buy” rating.

Risk warning

There are risks that feed-in tariffs for nuclear power have fallen short of expectations, fuel costs have risen above expectations, and the construction progress of new units falls short of expectations.