CGN’s 2021 Core Profit In Line; Stable Operation and Robust Cash Flow Drive Decent Dividend Yield

We raise our fair value estimate of no-moat CGN Power slightly to HKD 2.30 per share from HKD 2.26, after a minor tweak of earnings forecasts to incorporate the latest nuclear unit commissioning schedule over the next five years. We expect the company’s net profit to grow at a five-year CAGR of 3.8% through 2026, up slightly from 3.6% in our prior forecasts, underpinned by visible project pipelines. The shares are fairly valued at the current level. Given the stable operation at nuclear power stations, we expect CGN Power’s cash flows to remain robust. This should support a steady growth in absolute dividend payouts, and the company’s proposed 2021 dividend of CNY 0.084 per share is yielding 5.1% presently.