CGN Power announced 2019 gross power generation of 190.2TWh （+14.1% YoY） and on-grid power generation of 179.0TWh （+14.0% YoY）， which is in line with our expectation. We maintain our EPS forecasts of Rmb0.20 in 19E （+2.4% YoY）， Rmb0.21 in 20E （+8.5% YoY） and Rmb0.24 （+10.7% YoY）. We maintain our target price at HK$2.40, representing 10.4x 19E PE and 1.2x 19E PB. With 13.7% upside, we maintain outperform recommendation.
Steady power generation. As of 2019, the company managed 24 nuclear power units under operation, with a total installed capacity of 27.1GW. Total on-grid power generation amounted to 179.0TWh （+14.0% YoY）， and average utilization hours achieved 7507 hours （vs 7554 hours in 2018）.The satisfying results is mainly attributable to Yangjiang Unit 6 and Taishan Unit 2 commenced into operations in 2019, despite disappointing results of Ningde power station due to heavy rainfall in 1H19 in Fujian. Moreover, Fangchenggang and Hongyanhe station recorded 16.1TWh （+6.88 YoY） and 30.8TWh （+8.82% YoY） of on-grid power generation respectively, which is beyond expectation. The company completed 19 refueling outages in 2019 as planned （vs 14 refueling outages in 2018）. The company also noted that Hongyanhe Unit 5 and Unit6 would experience a delaying completion into 2H21 and 1H22 due to policy issues. Although no new units would be commenced into operation in 2020, we believe the company would achieve a moderately positive growth in power generation if all units could operated at full load.
Marketization percentage remains stable while tariff discount decline. For the first 11 months of 2019, marketization percentage of total power generation accounts for 32.18% （vs 32.55% in 2018）， including Guangdong province, which introduced liberalised trading of nuclear power since 2018.Average DPS tariff has increased from Rmb0.354 in 2018 to Rmb0.360 in2019. The company noted that Guangdong province had increased total DPS volume from 200TWh in 2019 to 260TWh in 2020 in the 2020 DPS plan, of which 83% of the planned volume will bear a tariff discount of Rmb0.047 （vs Rmb0.044 in 2019）. Fujian, Guangxi and Liaoning also released the DPS plan for 2020 and the total volume is relatively stable compare with 2019. The company is confident on market-based bidding given its price and cost advantage over thermal power companies.
Maintain outperform. We maintain our EPS forecasts of Rmb0.20 in 19E （+2.4% YoY）， Rmb0.21 in 20E （+8.5% YoY） and Rmb0.24 （+10.7% YoY）. We maintain our target price at HK$2.40, representing 10.4x 19E PE and 1.2x 19E PB. With 13.7% upside, we maintain outperform recommendation.