20230623-招银国际-华润电力-00836.HK-Unlock_potential_value_21页_1mb

CR Power Equity Research Summary

Company Background

China Resources Power (CR Power) is an integrated energy company under China Resources Group, listed on the Hong Kong Stock Exchange. It operates power generation assets including renewable (wind, solar, hydro), thermal (coal and gas), and hydroelectric plants, with a strong presence across China's key economic regions. As of 2022, it managed 246 power plants totaling about 52,581MW of operational capacity, aligned with national energy transition policies.

Business Segments and Growth

• Thermal Power Segment: Focuses on coal and gas-fired plants, historically impacted by volatile coal prices. Expected improvement in 2023 due to lower imported coal costs and long-term contracts.
• Renewable Energy Segment: Rapidly growing, targeted new installations of 7,000MW in 2023 (3,850MW solar, 3,150MW wind), with a broader goal of 40GW by 2025. Driven by lower upstream costs (e.g., wind turbine prices fell ~73% YoY), higher project IRR, and national carbon neutrality policies that boost renewable investments.

Financial and Valuation Highlights

• Revenue growth steady (15% YoY in 2022), but thermal power losses offset by renewable gains. 2023E P/B ratios: 0.90x (FY23) and 0.81x (FY24), undervalued compared to peers (historical avg. P/B 1.4x/1.2x).
• Initiate "BUY" rating with target price HK$23.2 (35.4% upside), based on SOTP valuation: 1.4x FY23E P/B for renewable segment (~peers avg.) and 0.7x FY23 forward P/B for thermal segment (~peers avg.).

Key Recommendations and Risks

• Recommendation: BUY due to attractive valuation and renewable growth potential. Spin-off of new energy arm to A-shares to raise funds for capacity expansion and improve transparency.
• Risks: Coal price volatility, policy uncertainty, and execution challenges in achieving renewable targets. Positive catalysts include market influence post-spin-off and energy market reforms.

Analyst Certification and Disclosures

The report is based on independent analysis by CMB International Global Markets. No conflicts of interest indicated, with standard disclaimers on research uncertainty and reliance.