Societe Generale Securities: Maintaining China Resources Power's (00836) “Buy” Rating, Stabilize Thermal Power, and Keep Green Electricity Under Pressure

The Zhitong Finance App learned that Societe Generale Securities released a research report stating that China Resources Electric (00836) predicts net profit of HK$115.03, 127.22, and 13.395 billion HK$13.395 billion from 2026 to 2028, respectively, -20.8%, +10.6%, and +5.3% year-on-year, maintaining a “buy” rating. China Resources Power released its 2026 interim report. In the first half of the year, the company achieved operating income of HK$54.977 billion, profit attributable to the company owners of HK$6.649 billion, -15.53% year-on-year, gross profit margin of 52.08%, -4.26pct year-on-year, financial expenses increased HK$357 million year-on-year, and the performance of joint ventures accounted for +HK$1,020 million year-on-year. In addition, the company plans a cash dividend of HK$0.321 per share, with a corresponding dividend rate of 25.0%, +1.6pct compared to the previous year.

Societe Generale Securities's main views are as follows:

Thermal power: rising electricity volumes hedge pressure on electricity prices and coal prices, and overall operation is steady

In the first half of the year, the company achieved +16.9% year-on-year electricity sales to 84.634 billion kilowatt hours. Of these, the number of hours used by the unit was +10h. The increase in electricity volume was mainly driven by the 6 million-kilowatt units put into operation at 25H2. Affected by the easing of the electricity market and the decline in electricity prices in Changxie, the company's coal feed-in price narrowed year-on-year to 30.4 yuan/megawatt-hour to 364.0 yuan/megawatt-hour (RMB, excluding tax), while the unit price of coal machine standard coal was +8 yuan/ton to 832 yuan/ton, and the unit fuel cost was +3 yuan/megawatt-hour to 245 yuan/megawatt-hour to 245 yuan/megawatt-hour over the same period.

In the first half of the year, the core business profit attributable to owners of the company's pure thermal power business (excluding coal) was HK$2,797 million, +HK$0.09 billion year over year, corresponding electricity profit of HK$0.033 per kilowatt hour, and -0.006 HKD/kWh compared to the previous year. In addition, the company's coal business achieved core business profit of HK$268 million, compared to -HK$147 million in the same period last year; the profits of participating companies such as Shanxi Zhongrun Aluminum, Gansu Changle Power Plant, and Chongqing Energy increased, and the company should have accounted for +932 million HK$932 million to HK$1,593 billion over the same period last year.

Green Power: Renewable energy business owners should account for core business profit of HK$1,730 billion year-on-year

In the first half of the year, the company achieved 1027 and 581 hours of use of scenery, respectively, down 241 and 95 hours from the previous year. As a result, wind power sold 27.546 billion kilowatts of electricity, -3.2% over the same period, while PV sales increased +42.8% year-on-year to 8.257 billion kilowatts, driven by installed capacity growth. During the period, due to a decline in market-based electricity prices and an increase in the share of affordable projects, wind and light feed-in tariffs were 25.0 and -28.2 yuan/megawatt-hour year on year, respectively, to 371.8 and 276.7 yuan/megawatt-hour (RMB, excluding tax). As a result, renewable energy business owners should account for the core business profit of HK$3,907 billion, compared with the previous year - HK$1,730 billion. In addition, China Resources Xinneng was spun off and listed during the period, and the company's balance ratio fell to 63.28% from 67.35% at the beginning of the period.

Risk Alerts

The risk of electricity price fluctuations, the risk of a sharp rise in coal prices, the risk of fluctuations in landscape resources, the risk of declining electricity demand, and the risk of macroeconomic fluctuations.