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On Wednesday, Jefferies increased the stock price target for China Resources Power Holdings (836:HK) (OTC: CRPJY) to HK$22.40 from HK$18.52, while reiterating a Buy rating on the stock. The firm’s analyst praised the company’s fiscal year 2023 performance, noting a significant increase in net profit and successful renewable energy expansion.
China Resources Power Holdings reported a net profit of HK$11 billion for fiscal year 2023, which marks a substantial 56.2% year-over-year growth. The company has also met its renewable grid connection goal of 7GW for the year and has established an ambitious target of reaching a 10GW grid connection in fiscal year 2024.
The company’s strategic plan to raise its renewable energy capacity by 40GW during the 14th Five-Year Plan period remains on track. This commitment to renewable energy is a key component of China Resources Power’s operational strategy and future growth.
In terms of operational costs, the company anticipates a decrease in fuel expenses by 3-5% year-over-year, attributed to a drop in coal prices. This expected reduction in costs is projected to lead to better generation spreads in fiscal year 2024.
Moreover, China Resources Power has secured a RMB700 million capacity payment for the first two months of 2024. This payment, which equates to an impact of RMB0.025/kWh on the tariff, applies to most of the company’s coal-fired plants, providing a financial boost for the start of the fiscal year.
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