CRP’s 1H Results in Line; Dividend Outlook Lackluster Despite Falling Capital Expenditure in 2021

We maintain our fair value estimate of HKD 13.30 per share for China Resources Power, or CRP, following in line first-half results. Net profit rose 12.7% year over year to HKD 4.5 billion, with growth largely driven by renewable capacity additions, partly offset by a weaker Chinese yuan against the Hong Kong dollar and a one-off impairment. However, its coal-fired power segment operations lagged the industry average, reflecting rising pressure from cross-provincial power supply amid stricter environmental control in coastal regions. In addition, CRP was also poorly positioned amid the coronavirus pandemic, as thermal output in Hubei province, which accounts for 12% of the company’s total thermal output in the first half, saw a sharp 22% fall in power output compared with 2% nationwide decline.