China Resources Power: Special Dividend Is a Mild Positive; Shares Are Undervalued

To celebrate its 20th listing anniversary and readmittance as a constituent in the Hang Seng Index, China Resources Power, or CR Power, will pay a special dividend of HKD 0.50 per share. The amount is not significant as the firm still needs to conserve cash for its capital expenditure, in our view. We keep our earnings forecasts largely unchanged and maintain our fair value estimate at HKD 25. We think CR Power is undervalued, trading at 2024 price/book ratio of 0.6 times and price/earnings of around 6 times. We believe the recovery in profitability for the thermal power segment and the pending listing of its renewable energy segment should support share price performance. We lower CR Power’s Morningstar Uncertainty Rating to High from Very High as we think the firm will benefit from the government's commitment to support the renewable energy industry.