Guotai Junan International maintains a "buy" rating on CGN POWER (01816) with a target price of 3.8 Hong Kong dollars.

Guoce International released a research report, maintaining a "buy" rating for CGN POWER (01816). The predicted revenue for the company for the years 2024-2026 are 88.3 billion yuan/92 billion yuan/97.8 billion yuan, with growth rates of 7.0%/4.2%/6.3%; net profit attributable to shareholders are 12 billion yuan/13.4 billion yuan/14.9 billion yuan, with growth rates of 12.5%/11.2%/11.1%. It is expected that the company's power generation will increase steadily year-on-year in 2024, with overall performance remaining steady this year, maintaining a target price of 3.8 Hong Kong dollars. Guoce International's main points are as follows: In the first three quarters, revenue reached 62.37 billion yuan, a year-on-year increase of 4.06%. In the first three quarters of 2024, the company's power generation is expected to reach 166.89 billion kilowatt-hours, a year-on-year increase of 4.97%. Of this amount, 1303.32 kilowatt-hours come from subsidiary companies, a year-on-year increase of 5.02%, and 365.58 kilowatt-hours from affiliated companies, a year-on-year increase of 4.78%. The company achieved a revenue of 62.37 billion yuan, a year-on-year increase of 4.06%, with a non-controlling net profit of 9.74 billion yuan, a year-on-year increase of 0.91%. The increase in costs is due to the first-time material replacement costs of new units and the booking of spent fuel handling funds for units in operation for over 5 years. It is expected that the company's annual power generation and performance will continue to rise steadily. Market trading volume has steadily increased, with average electricity prices remaining stable. Market trading volume in the first three quarters was approximately 854.9 billion kilowatt-hours, accounting for 51.2%, a year-on-year increase of 0.7%. The average market trading price including tax was around 0.39 yuan per kilowatt-hour, a decrease of about 1 cent compared to the same period last year, remaining stable. With the addition of new approved projects and steady progress in ongoing projects, 5 new nuclear power projects with a total of 11 units were approved in August of this year; CGN received 3 projects with 6 units in total, including Shandong Zhaoyuan Units 1 and 2, Guangdong Lufeng Units 1 and 2, and Zhejiang Cangnan Units 3 and 4. The company currently has 16 nuclear power units under construction, and is optimistic about the growth momentum brought about by the acceleration of new unit connection to the grid in the future. Risks to be aware of include lower than expected power generation, longer than expected major repairs, lower than expected electricity prices, slower than expected progress in nuclear power plant construction, higher than expected nuclear fuel prices, and tighter policies in the nuclear power industry.