Longer Maintenance Shutdown Weighs on CGN Power's Third Quarter; Growth Outlook Intact

CGN Power’s third-quarter results were slightly below our expectations, largely due to longer maintenance shutdowns. Nevertheless, the company’s operation and growth outlook is unchanged. As most of the scheduled refueling and repair projects were completed, we expect CGN’s power volume output and profit growth to catch up in the fourth quarter. We maintain our fair value estimate of HKD 2.30 per share and our full-year net profit forecast of CNY 10.4 billion. We continue to expect net profit to grow at a five-year compound annual rate of 3.8% through 2026, underpinned by the company's visible project pipelines. We think the shares are slightly undervalued as of the Oct. 27 market close. Given the stable operation at nuclear power stations, we expect CGN Power’s cash flows to remain robust, which should support a steady growth in absolute dividend payouts. Our estimated 2022 dividend per share of CNY 0.092 is yielding about 6.2% presently.