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长江电力
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电力、煤气及水等公用事业
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2010-11-03
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7.39
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6.01
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46.45%
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7.54
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2.03% |
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7.54
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2.03% |
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详细
Solid Q3 result; Asset injection to boost capacity: Yangtze reported aset of solid results: net profit came in at Rmb7.2bn, 87% of our full yearforecast. We believe the company is on track to achieve our full yearestimate of Rmb8.3bn in 2010. Yangtze Power acquired 12.6GW hydrogeneration capacity from its parent at a total consideration ofRmb104bn. Yangtze Power settled the transaction by: 1) assumingRmb49bn debt in target assets; 2) issue of 1.6bn shares at Rmb12.68 pershare to parent; 3) Cash payment of Rmb34.9bn. Hydro generation is back on track: Negatively affected by the droughtseason in early 2010, Yangtze Power had been suffering sluggishgeneration. However, its latest announced 1-9M generation figuressuggest that the generation trend finally turned around: total powergeneration in 1-9M was 80.3bn kWh, implying 139% YoY growth dueto capacity growth from asset injection, and it is on track to achieve ourfull year forecast. Stable long term income: We believe hydro generation operation riskis significantly lower compared to coal-fired generation thanks toimmunity to fuel cost & priority in generation dispatching, thus leadingto higher earnings visibility. Hydro power tariff has been at significantdiscount to coal-fired tariff, however, we do not expect the tariffalignment between hydro & coal-fired generation to happen in the nearterm. Positive outlook intact: We maintain OW on Yangtze Power & adjustour Dec-2011 PT (DCF derived PT with WACC of 7.9%) to Rmb9.8after factoring in 1.6bn new shares issuance for parent asset injection &50% stock dividend announced in July 2010. Currently the stock istrading at 15x 2011 PER, inline with its domestic peers. However, webelieve Yangtze Power should deserve a valuation premium due tohigher earnings visibility & lower operation risk in hydro generation.
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