A lot of new projects were added last year, and the year-on-year change in wind/solar power generation in the first four months of this year is still superior to that of peers. Faced with weak wind speed from the beginning of the year to date and a slight increase in the national electricity limit rate, the company's wind/solar power generation continued to rise 8%/191% year on year in the first 4 months of this year. We believe that the company added 3.1/2.2 gigawatts of wind/light last year (20%/184% year-on-year increase) still guarantees power generation capacity. At the same time, we have also noticed that the recovery of the company's hydropower utilization rate is weaker than expected. Our understanding is that the company's projects in Yunnan and Sichuan are more affected by hydrological conditions in individual regions, and there has been no significant improvement in incoming water for the time being. Currently, we maintain the company's wind/light utilization hourly forecast, but have lowered the hydropower utilization hour by 1.6% to reflect the current incoming water situation.

The high installed capacity of thermal power is still beneficial, increasing the resilience of the profit side this year. Although the company accounts for the highest proportion of thermal power installations among the operators we cover, the company shows resilience on the profit side due to the decline in wind/photovoltaic prices and utilization hours this year, especially in the current situation where coal prices are declining year on year. We estimate that for every 1% change in thermal power fuel costs, the 2024/25 profit change is about 2%, every hour of wind/light utilization changes of 1%, and the profit change in 2024/25 is about 1.2%.

The benefits of faster installation are still quite clear, and target prices have been raised. We adjusted operating costs and utility hours, so we lowered our 2024/25 profit forecast by 0.5%/1.3%. Considering that the current policy still guarantees the company's utilization rate after accelerated installation, we changed the benchmark of the Segment Valuation Law to 2025, maintained the valuation multiplier, raised the target price to HK$27.55, and maintained the purchase rating. We believe that due to the year-on-year decline in coal prices, the company may report a good year-on-year increase compared to other new energy operators.

It is not ruled out that there will still be an opportunity to reverse purchases during the year. Since the beginning of the year, the company's stock price has risen by more than 50%, especially in the second quarter of this year, it has returned 30%. We believe that the company's ROE, which has been superior to its peers since 2023, is one of the main reasons. Coupled with the current market's emphasis on dividends, the dividend rate and valuation were more attractive during the period of rapid growth in the company's profits. However, after the current valuation has been repaired, in terms of our 2025 valuation, there is currently less room for increase than the increase in the second quarter of this year. We think investors can choose to wait for a pullback to buy.