Intrinsic Value China Three Gorges Renewables (Group) Co.,Ltd. (600905.SS)

• Previous Close: $4.11
• Intrinsic Value: $1.97
• Upside potential: -52%

Stock Valuation Context

Business Model And Market Position

China Three Gorges Renewables operates as a major renewable energy power generation company, primarily generating and selling electricity from wind, solar, and hydropower assets. Its core revenue model is built on long-term power purchase agreements and market-based electricity sales, providing stable cash flows. The company also engages in strategic investment, project contracting, and technical consulting services, creating additional revenue streams and supporting its integrated development approach in the renewable utilities sector. As a subsidiary of the state-owned China Three Gorges Corporation, it benefits from strong government backing and extensive project experience. This positions it as a dominant player in China's rapidly expanding clean energy market, leveraging its scale and expertise to secure prime project sites and advance the national energy transition goals. The company's diversified renewable portfolio and technical capabilities provide a competitive edge in a sector driven by policy support and increasing demand for sustainable power.

Revenue Profitability And Efficiency

The company reported robust revenue of CNY 29.7 billion for the period, demonstrating strong top-line performance from its power generation activities. Net income reached CNY 6.11 billion, reflecting healthy profitability margins. Operating cash flow was substantial at CNY 18.9 billion, indicating efficient conversion of earnings into cash, though significant capital expenditures highlight ongoing investment in capacity expansion.

Earnings Power And Capital Efficiency

Diluted earnings per share stood at CNY 0.21, representing the company's earnings power on a per-share basis. The substantial operating cash flow of CNY 18.9 billion significantly exceeded net income, indicating strong quality of earnings. However, aggressive capital investment of CNY 30.9 billion reflects the capital-intensive nature of renewable energy development and the company's growth-focused strategy.

Balance Sheet And Financial Health

The balance sheet shows total debt of CNY 157.6 billion against cash and equivalents of CNY 5.43 billion, indicating a leveraged financial structure typical for infrastructure-intensive utilities. The debt level supports the company's extensive project development while the moderate cash position provides liquidity for ongoing operations. The low beta of 0.197 suggests relative stability compared to the broader market.

Growth Trends And Dividend Policy

The company maintains a dividend policy with a payout of CNY 0.067 per share, providing income to shareholders while retaining capital for growth. The significant capital expenditure program indicates strong commitment to capacity expansion and market share growth in China's renewable energy sector, aligning with national carbon neutrality goals and increasing electricity demand.

Valuation And Market Expectations

With a market capitalization of approximately CNY 122.6 billion, the company trades at a valuation reflecting its position in the renewable energy transition. The market appears to price in continued growth potential supported by China's clean energy policies, while acknowledging the capital-intensive nature of the business and the associated debt levels required for expansion.

Strategic Advantages And Outlook

The company benefits from strong state backing, extensive project experience, and diversified renewable assets across wind, solar and hydro. Its strategic position within China's energy transition framework provides stable long-term growth prospects. The outlook remains positive given increasing renewable energy demand and supportive government policies, though execution on large-scale projects and debt management will be critical.

Sources

Company financial reportsStock exchange disclosuresMarket data providers