Company Reports

We keep CGN Power’s fair value estimate at HKD 2.26 per share after its in-line first-quarter 2024 results. Our earnings forecasts are unchanged. The firm’s share price performance has outperformed other utility peers, given that its power tariff is more stable than that of renewable players. Nonetheless, we think this is already priced in, and investors should wait for a better entry point.

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.

Since building the Daya Bay nuclear power plant in 1987, CGN Power has extended its leadership in the nuclear power market with a strong record of plant reliability, performance, and safety. Thanks to its scale and state-owned support, we expect CGN to remain as a leader in the sector.

Year-to-date share price performance of China utilities under our coverage was generally lackluster, and we believe the market remains concerned about slow subsidy settlements and falling tariffs. We maintained our fair value estimates per share for CGN Power (HKD 2.24); China Longyuan (HKD 12.00); China Resources Power, or CR Power (HKD 25.00); China Suntien Green Energy (HKD 3.66); China Three Gorges Renewables, or CTGR (CNY 4.68); and Datang Renewable, or DR (HKD 2.94). Our preference among the renewable players is China Longyuan given its strong capacity growth and leadership position in the sector. Meanwhile, CR Power is our pick for investors who like exposure to coal-fired power, as the recovery in profitability for the thermal power segment should continue in 2024.

We maintain our fair value estimate of HKD 2.24 for CGN Power, despite a slight miss in its third-quarter 2023 results. Our earnings forecasts are largely unchanged, and we think the shares are attractive currently, trading at around 0.7 times price/book with about 6% dividend yield for 2024. We estimate CGN’s net profit to grow at a five-year CAGR of 7.2% over our explicit forecast period, underpinned by its stable nuclear power operations.

Since building the Daya Bay nuclear power plant in 1987, CGN Power has extended its leadership in the nuclear power market with a strong record of plant reliability, performance, and safety. Thanks to its scale and state-owned support, we expect CGN to remain as a leader in the sector.

We maintain our fair value estimate of HKD 2.24 for CGN Power, following the firm’s largely in-line first-half 2023 results. We think the shares are attractive currently trading at around 0.8 times price/book and with more than a 5% dividend yield for 2023. We estimate CGN’s net profit to grow at a five-year CAGR of 7.5% over our explicit forecast period, underpinned by its stable nuclear power operations.

We are transferring coverage of CGN Power with no-moat and stable moat trend ratings, and a fair value estimate of HKD 2.24. We estimate CGN’s net profit to grow at a five-year CAGR of 7.5% over our explicit forecast period, underpinned by its stable nuclear power operations. We think the shares are attractive currently with the firm trading at around 0.8 times price/book and more than 5% dividend yield for 2023.

Since building the Daya Bay nuclear power plant in 1987, CGN Power has extended its leadership in the nuclear power market with a strong record of plant reliability, performance, and safety. Thanks to its scale and state-owned support, we expect CGN to remain as a leader in the sector.

Since building the Daya Bay nuclear power plant in 1987, CGN Power has extended its leadership in the nuclear power market with a strong record of plant reliability, performance, and safety. Thanks to its scale and state-owned support, CGN has also innovated new technology. The third-generation Hualong One nuclear reactor, jointly developed with China National Nuclear Power, is among the more technically advanced globally.

We maintain our fair value estimate of no-moat CGN Power at HKD 2.30 per share, after the company's in-line 2022 results and a minor tweak of our earnings forecast 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 5.4% through 2027, up from an average of 1.6% annual growth in the prior three years, underpinned by visible project pipelines. We think the shares are slightly undervalued as of market close on March 16. Given the stable operation at nuclear power stations, we anticipate CGN Power's cash flows to remain robust. This should support a steady growth in absolute dividend payouts, and the company's proposed 2022 dividend of CNY 0.087 per share is yielding 5.2% presently.

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.

Since building the Daya Bay nuclear power plant in 1987, CGN Power has extended its leadership in the nuclear power market with a strong record of plant reliability, performance, and safety. Thanks to its scale and state-owned support, CGN has also innovated new technology. The third-generation Hualong One nuclear reactor, jointly developed with China National Nuclear Power, is among the more technically advanced globally.

Since building the Daya Bay nuclear power plant in 1987, CGN Power has extended its leadership in the nuclear power market with a strong record of plant reliability, performance, and safety. Thanks to its scale and state-owned support, CGN has also innovated new technology. The third-generation Hualong One nuclear reactor, jointly developed with China National Nuclear Power, is among the more technically advanced globally.

We maintain our fair value estimate for CGN Power at HKD 2.30 per share, following the company’s in-line first-half 2022 results, which reflect a stable operation at nuclear stations, with growth largely driven by commissioning of new projects. We maintain our full-year net profit forecast of CNY 10.4 billion, as well as the five-year net profit CAGR of 3.8% through 2026, underpinned by visible project pipelines. We think the shares are slightly undervalued as the market closed on Aug. 24. 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 of CNY 0.092 per share translates to a yield of about 5.7% presently.

We maintain our fair value estimate of no-moat CGN Power at HKD 2.30 per share, as the company’s first-quarter results delivered no major surprises, and China’s recent approval of six nuclear generation units are also within expectations, two of which are CGN Power’s Lufeng project. We maintain our full year net profit forecast of CNY 10.4 billion, as well as the five-year net profit growth CAGR of 3.8% through 2026, underpinned by visible project pipelines. We think 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 about 5% presently.

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.

Since building the Daya Bay nuclear power plant in 1987, CGN Power has extended its leadership in the nuclear power market with a strong record of plant reliability, performance, and safety. Thanks to its scale and state-owned support, CGN has also innovated new technology. The third-generation Hualong One nuclear reactor, jointly developed with China National Nuclear Power, is among the more technically advanced globally.

China’s power shortage, which boosted demand, and the contribution from newly commissioned Hongyanhe Unit 5 led to a 10% year-over-year rise in CGN Power’s output in the third quarter, despite a longer maintenance shutdown. We expect CGN Power to continue to benefit from the favorable operating environment in the fourth quarter, but tweaks to our profit forecast are minor. We maintain our HKD 2.26 fair value estimate and our five-year net profit growth CAGR forecast of 3.6% through 2025, underpinned by visible project pipelines. The shares appear fairly valued at their current level. We expect the company’s cash flows to remain robust, which should support a steady growth in absolute dividend payouts. Our estimated 2021 dividend of CNY 0.08 per share is yielding 4.8% presently.

CGN Power’s first-half net profit of CNY 5.5 billion points to a 14% year-over-year fall in second-quarter earnings, which reflects a transitory effect on slower tax refunds as well as longer outage periods due to the maintenance and fuel change schedule. There were no major surprises in the results, and we expect the company’s earnings growth to improve in the second half, supported by the commissioning of Hongyanhe Unit 5 on July 31 and shorter outage periods. We fine-tune our forecasts to factor in the latest project commissioning schedule, while maintaining our fair value estimate at HKD 2.26 per share. We forecast the company’s net profit to grow at a five-year compound annual growth rate of 3.6% through 2025, underpinned by visible project pipeline.