Electricity sales increased significantly in the first 10 months: According to the company's announcement, the combined total electricity sales volume for the first ten months of 2024 was 108,220,668 megawatt-hours, an increase of 30.56% over the same period last year. Thanks to the new installation and commissioning, the company's wind power sales increased 57.05% year on year; photovoltaic electricity sales increased 79.55% year on year. Hydropower, on the other hand, benefited from the restoration of water in the first half of this year, and electricity sales increased 62.62% year over year. The company's overall electricity sales growth rate is outstanding in the industry, showing that the company's incremental projects are progressing steadily, thus driving the rapid development of the electricity sales business.

Asset restructuring optimizes the business structure: The company plans to sell its hydropower assets (5.9 GW, about 60% of the shares) to Yuanda Environmental Protection, a subsidiary of the parent company, in exchange for new shares to be distributed by Yuanda Environmental Protection. It is expected that China Electric Power will hold more than 50% of Yuanda's shares after the transaction.

After the transaction is completed, Yuanda Environmental Protection will become the Group's A-share hydropower asset platform. The Group plans to gradually integrate the remaining 20 gigawatts of hydropower assets into Yuanda Environmental Protection over the next 3 years.

This transaction can be viewed as the return of the company's hydropower assets to A, making full use of the characteristics of the current A-share market's high valuation of hydropower assets. Meanwhile, through its controlling interest in Yuanda Environmental Protection, the company has further consolidated its position as the Group's flagship comprehensive clean energy listing platform. The company's wind power and photovoltaic assets will be preserved, and plans to return to A as a whole will continue.

Construction of wind and solar projects accelerated: The company added 3.3 GW of clean energy installed capacity in the first half of this year, of which 1.2 GW/2.1 GW of wind power and photovoltaics were respectively, driving rapid growth in wind and light performance. In the first half of the year, the company's profits of Wind and Optoelectronics fell 2.5/3.3 points year-on-year respectively, mainly due to an increase in the share of affordable projects. As of June 2024, the company's total clean energy accounts for 77.07% of its total installed capacity, and is expected to add about 7 GW of installed capacity throughout the year. The company aims to achieve 90% of clean energy installations by 2025. The accelerated development of new energy projects will bring continuous and steady profit growth to the company.

The target price is HK$4.73, maintaining the purchase rating: the company's profit growth in 2024 is more certain, and the return on self-invested projects has increased under the current low cost trend; hydropower profits have benefited from the recovery of incoming water. We expect the company's net profit to be 5.1/6/7.1 billion in 2024-2026, an increase of 92/17/ 18% over the same period last year. Due to the decline in electricity prices due to the increase in the proportion of new energy consumption and market-based transactions, we lowered the valuation of the NEV sector to 7X PE. The company's reasonable market value in 2025 was HK$58.5 billion, corresponding to a target price of HK$4.73. The coal/hydropower/new energy sector was valued at 1xPB/8xPE/7xPE respectively. There is room for 52% increase compared to the current price, maintaining the purchase rating.

Risk factors: New installed capacity falls short of expectations, electricity demand falls short of expectations, and feed-in tariffs have dropped sharply.