CGN Power Earnings: Slight Miss Due to Impairments; Shares Fairly Valued

CGN Power’s 2023 net profit of CNY 10.7 billion, up 7.6% year on year, trailed our estimate due to asset impairment losses of CNY 342.6 million—mainly due to impairment of inventories and construction projects related to its parent's wind power business. After rolling forward and fine-tuning our model, we slightly increase our fair value estimate to HKD 2.26 per share from HKD 2.24. Our 2024-27 earnings forecasts are largely unchanged, and we think the shares are fairly valued currently. That said, we think CGN’s estimated 2024 dividend yield of close to 5% and investors’ preference for utilities with stable tariffs will continue to support its share price.