CGN's Q3 Largely in Line; China's Decarbonization Efforts Will Support Long-Term Growth

China’s power shortage, which boosted demand, and the contribution from newly commissioned Hongyanhe Unit 5 led to a 10% year-over-year rise in CGN Power’s output in the third quarter, despite a longer maintenance shutdown. We expect CGN Power to continue to benefit from the favorable operating environment in the fourth quarter, but tweaks to our profit forecast are minor. We maintain our HKD 2.26 fair value estimate and our five-year net profit growth CAGR forecast of 3.6% through 2025, underpinned by visible project pipelines. The shares appear fairly valued at their current level. We expect the company’s cash flows to remain robust, which should support a steady growth in absolute dividend payouts. Our estimated 2021 dividend of CNY 0.08 per share is yielding 4.8% presently.