Komo: China Resources Electric (00836)'s interim results beat expectations and maintained its “neutral” rating

The Zhitong Finance App learned that J.P. Morgan Chase released a research report stating that it maintains China Resources Electric (00836)'s “neutral” rating, with a target price of HK$17. China Resources Electric Power's performance in the first half of this year beat expectations. The profit of the thermal power business increased 16% year over year. The performance was strong against the backdrop of falling electricity prices during the period and rising fuel costs from April. I believe the contribution of coal production and capacity to electricity costs brought profit support. The interim dividend for the period was HK32.1 cents per share. The dividend ratio increased to 25% from 23.4% in the same period last year, bringing a positive surprise.

According to the Komo report, the core profit of the thermal power sector increased 16% year over year to HK$3.1 billion. Even after deducting the contribution to coal production, pure thermal power's profit was about HK$2.8 billion, which was roughly the same year over year, which is better than the bank's forecast. The price of thermal power during the period fell 7% year-on-year, and the unit fuel cost remained roughly flat. I believe the increase in capacity electricity costs was helpful. Renewable energy core profits fell by more than 30% year-on-year to HK$3.9 billion, mainly due to falling wind and solar electricity prices and declining hours of wind power utilization.

On the financial side, the company's net debt-to-total equity ratio fell from 151% at the end of 2025 to 116% in the first half of this year, which is believed to be related to China Resources New Energy's (001248.SZ) listing capital raising. The bank expects the market to make positive revisions to China Resources Electric's 2026-2027 profit forecast, and believes that the stock price will respond positively to this strong interim results.