China Resources Power (0836.HK) Profitability Forecast Analysis Report

China Resources Power Holdings Co., Ltd. is the flagship power subsidiary of China Resources Group, listed on the Main Board of the Hong Kong Stock Exchange on November 12, 2003 (stock code: 0836.HK). The company is mainly engaged in power investment, construction, operation and management businesses, covering two major areas: thermal power and new energy. As of the end of 2024, the company’s total assets reached HK$362.464 billion, net assets HK$119.952 billion, annual turnover HK$105.284 billion, and profit for the year HK$15.979 billion [1].

From the perspective of installed capacity structure, the company is dominated by thermal power. As of the end of December 2024, the equity installed capacity of thermal power was 25.667 million kW, accounting for more than 99% of the total equity installed capacity. This highly concentrated thermal power business structure makes the company highly sensitive to coal price fluctuations and electricity price changes. From the market performance perspective, the company’s current market capitalization is US$89.98 billion, share price is HK$17.38 per share, P/E ratio is only 6.98x, and P/B ratio is 0.75x, indicating that the market has a relatively conservative valuation of the company [2].

The average on-grid electricity price of China Resources Power has shown a clear downward trend over the past three years. Data shows that the average on-grid electricity price (including tax) was 0.4841 yuan/kWh in 2022, slightly rose to 0.4848 yuan/kWh in 2023, but fell significantly to 0.4629 yuan/kWh in 2024, a decrease of 4.5% [1]. This trend reflects deep structural changes in the power market.

The reasons for the decline in electricity prices are multifaceted. First, the reform of the electricity market continues to advance. Since October 2021, affected by rising fuel costs and the liberalization of electricity price reforms, the average electricity price has increased periodically, but as the market gradually digests policy dividends, the electricity price has gradually returned to rationality. Second, large-scale entry of new energy into the market has brought price competition pressure. Document No. 136 promotes the full entry of stock and incremental projects into the market across the country, and intensified market competition has put pressure on electricity prices [3]. Third, the power supply and demand pattern has changed. Although the national全社会用电量 reached 9.85 trillion kWh in 2024, an increase of 6.8% year-on-year, the growth rate of installed capacity on the supply side was faster, leading to the overall bargaining power tilting towards the power purchasers.

The decline in electricity prices has had a direct negative impact on the profitability of China Resources Power. Electricity price is the core variable of power enterprises’ revenue. Under the condition that installed capacity and power generation are relatively stable, the decline in electricity price will directly compress the profit margin of unit power generation revenue. The company’s current net profit margin is 12.35%, ROE is 11.20%, and these profit indicators are under downward pressure in the electricity price downward cycle [2].

From the cost side, the company’s thermal power-dominated business structure means that coal cost constitutes the main cost item. Although coal prices have fallen recently, large fluctuations in coal prices in history have seriously eroded the company’s profits. The “scissors gap” between electricity prices and coal prices has become a key variable affecting the company’s profitability. When electricity prices fall and coal prices are high, the company’s profit margin will be greatly compressed; conversely, it can achieve better profit performance.

Predicting the future profitability of China Resources Power requires comprehensive consideration of the following core driving factors:

is the primary consideration variable. Based on the current direction of power market reform, it is expected that electricity prices will maintain a moderate downward trend from 2025 to 2027, but the decline is expected to narrow. Soochow Securities research report predicts that China Resources Power’s net profit attributable to parent company will be HK$14.39 billion, HK$14.63 billion, HK$15.68 billion and HK$16.40 billion from 2024 to 2027, showing a steady growth trend [3]. This forecast is based on the assumptions of slowing electricity price decline and increasing contribution of new energy business.

is the key support for the company’s medium and long-term profitability. The company is actively expanding clean energy installed capacity, and plans to significantly increase the proportion of new energy during the “14th Five-Year Plan” period. With the expansion of new energy installed capacity, the company will gradually reduce its dependence on thermal power and smooth the impact of electricity price fluctuations on overall profits. New energy business usually has higher profit margins (despite facing subsidy withdrawal and market-oriented transaction pressure) and is expected to become a new profit growth point.

directly affects profit resilience. The company has established a 2.5-level fuel procurement control model for headquarters, regions, and regional companies, and exerts scale advantages through unified ordering and coordination of long-term coal contracts to enhance bargaining power [1]. Effective cost control can partially offset the pressure on the revenue side in the electricity price downward cycle.

Based on the above analysis framework, the following profitability forecast model can be constructed:

is an effective tool for prediction. Set three scenarios: optimistic, baseline, and pessimistic:

Scenario	Electricity Price Assumption	Coal Price Assumption	Renewable Energy Growth Rate	Expected Net Profit Growth Rate
Optimistic	2% decrease	5% decline	15%	+8-10%
Baseline	4% decrease	Flat	12%	+3-5%
Pessimistic	6% decrease	5% increase	8%	-5-8%

In terms of

, the company’s current P/E ratio is 6.98x, which is lower than the industry average, reflecting the market’s concern about the electricity price downward cycle. Based on DCF valuation analysis, assuming WACC is 8% and perpetual growth rate is 2%, the company’s intrinsic value under the baseline scenario is about HK$22-25 per share, which has an upside potential of about 25-40% compared to the current stock price [2].

Predicting future profitability also needs to fully consider the following risk factors:

: The demand for the power industry is greatly affected by the national economic cycle. If economic growth slows down and leads to a decline in electricity demand, it will further suppress electricity prices and power generation utilization hours. The company’s power generation equipment utilization hours were 4,414 hours in 2024, showing a downward trend compared to 4,455 hours in 2023 and 4,634 hours in 2022 [1], so we need to pay close attention to the evolution of this indicator.

: Fluctuations in coal prices are still a key variable affecting profits. Although the company controls costs through centralized procurement, if coal prices rise sharply and electricity prices cannot be transmitted synchronously, profits will be significantly eroded.

: The progress of power market reform, new energy market entry rules, carbon emission policies, etc., may have a major impact on the company’s business model and profitability. The new energy market entry rules vary across regions, which may lead to uneven project收益率 across regions [3].

From the valuation perspective, China Resources Power’s current P/E ratio is only 6.98x, P/B ratio is 0.75x, which is in the historical low range, and there is a discount compared to the average valuation of the utility industry [2]. The low valuation not only reflects the market’s concern about the electricity price downward cycle but also provides a margin of safety for long-term investors.

In terms of dividend yield, the company’s current dividend yield (TTM) is about 5.7%, which is attractive in the interest rate downward cycle [3]. The stable cash dividend capability provides valuation support for the company. Even if the profit growth rate slows down, the high dividend yield can still attract investors who pursue stable cash flow.

Technical analysis shows that the company’s stock price is currently in a sideways consolidation stage, lacking a clear trend direction [2]. The stock price volatility (standard deviation) is 1.40%, and the Beta coefficient is 0.68, indicating that the company’s stock price volatility is lower than the market average, suitable for investors with lower risk preferences. The KDJ indicator shows a buy signal, and the RSI is in the oversold area, so there may be a rebound opportunity in the short term. The key support level is HK$17.23, and the resistance level is HK$17.99.

Based on the above analysis, China Resources Power faces profit pressure brought by the decline in electricity prices, but the company is actively promoting new energy transformation, and the proportion of clean energy installed capacity is expected to continue to increase. In the short term, the negative impact of electricity price decline on profits will still continue, but the decline is expected to narrow; in the medium and long term, the development of new energy business will gradually reduce the company’s dependence on thermal power and improve the profit structure and risk resistance ability.

:

• Risk-seeking investors
  : Can gradually build positions in the current low valuation range, and pay attention to valuation repair opportunities brought by the inflection point of electricity prices and progress in new energy business.
• Conservative investors
  : Can use it as a high dividend allocation variety, and intervene when the dividend yield is above 5% to enjoy stable dividend income.
• Risk-averse investors
  : It is recommended to wait for the signal of electricity price stabilization or the proportion of new energy business to rise to a certain level before considering intervention.

: Risk factors such as further decline in electricity prices, rise in coal prices, slower-than-expected expansion of new energy business, and weakening of electricity demand due to macroeconomic downturn may affect the company’s future profit performance.

---

[1] China Resources Power Investment Co., Ltd. 2025 Fourth Issue Medium-Term Note Prospectus (https://www.crpower.com.hk/gsgg/2025-08-07/37f51935-62c3-4ee7-aaae-b3c81248d7e1.pdf)

[2] Jinling AI Financial Database - Company Overview and Market Data of China Resources Power (0836.HK)

[3] Soochow Securities Research Institute - Industry In-depth Report “New Energy Fully Enters the Market, Three Suppression Factors Release Green Power Reversal” (https://pdf.dfcfw.com/pdf/H3_AP202507181710804556_1.pdf)