Nationwide newly installed power generating capacity in 1M-5M2020reached 25.24 GW, down YoY by 13.5%. Among which, thermal, hydro,nuclear, wind and solar contributed 12.41 GW, 1.73 GW, 0 GW, 4.9 GW and6.15 GW, respectively, of newly installed capacity in 1M-5M2020.Cumulativeinstalled power generating capacity in China at the end of May 2020 reached1,925 GW, with 62.1% from fossil fuels and 37.9% from renewable energies.
Power sector investment in the domestic market is expected todramatically ramp up in the 2ndhalf of 2020. Nationwide power sectorinvestment in the first 5 months of 2020 increased YoY by 24.6% toRMB239.8 bn. In which, power engineering investment in 1M-5M2020amounted to RMB126.4 bn, up YoY by 64.6%; while nationwide power gridinvestment in the first 5 months of 2020 reached RMB113.4 bn, down YoY by2.0%.To boost domestic economic growth, we expect domestic power sectorinvestment in 2020 to hit at least RMB900 bn, up 12.6% YoY.In particular, weexpect power engineering investment in China in 2020 to be no less thanRMB350 bn (+11.5% YoY), while the spending on power grid to be no lessthan RMB550 bn (+13.3% YoY).
We maintain the "Accumulate" investment rating and raise our TP toHK$3.80. We expect deep reform and corporate transformation to take placein a bid to improve overall profitability as well as to ensure the continueddevelopment of the Company. The new TP translates to 18.1x/ 13.0x/ 10.0x2020-2022 PER or 0.4x/ 0.4x/ 0.3x 2020-2022 PBR, respectively.