Stock Analysis & Valuation China Yangtze Power Co., Ltd. (600900.SS)

• Previous Close: $26.36
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	26.97	2
Intrinsic value (DCF)	15.45	-41
Graham-Dodd Method		n/a
Graham Formula	20.71	-21

Strategic Investment Analysis

Company Overview

China Yangtze Power Co., Ltd. (600900.SS) stands as China's premier hydropower generation company and a global leader in renewable energy infrastructure. Operating as a subsidiary of state-owned China Three Gorges Corporation, the company owns, manages, and operates massive hydropower assets along the Yangtze River, including the world-renowned Three Gorges Dam, Gezhouba, Xiluodu, and Xiangjiaba power stations with a combined installed capacity of 45,495 MW. As China's largest clean energy producer, CYPC plays a critical role in the nation's energy security and carbon neutrality goals, providing stable, low-cost electricity to industrial and residential consumers across multiple provinces. The company's vertically integrated operations encompass power generation, distribution, and technology services, positioning it at the forefront of China's renewable energy transition. With its strategic ownership of the world's largest hydropower cluster, CYPC represents a cornerstone investment in sustainable infrastructure and China's green energy future.

Investment Summary

China Yangtze Power presents a compelling investment case as a low-beta, dividend-oriented utility with monopolistic characteristics in China's hydropower sector. The company's 45,495 MW installed capacity provides stable, predictable cash flows supported by long-term power purchase agreements, resulting in robust financial performance with CNY 32.5 billion net income and strong operating cash flow of CNY 59.6 billion. While the company carries significant debt (CNY 250.6 billion) to finance its massive infrastructure, its state-backed ownership and essential service nature mitigate default risks. The generous dividend yield (approximately 3.5% based on current data) appeals to income-focused investors, though growth prospects are constrained by limited expansion opportunities beyond existing river systems. Regulatory risks from potential tariff adjustments and climate change impacts on water availability represent key monitoring points for investors.

Competitive Analysis

China Yangtze Power enjoys an unassailable competitive position derived from its strategic ownership of China's largest and most productive hydropower assets along the Yangtze River. The company's monopoly over the Three Gorges Dam complex—the world's largest power station by installed capacity—provides unparalleled scale advantages and cost efficiencies that competitors cannot replicate. Unlike thermal power generators facing fuel cost volatility or renewable peers dealing with intermittency issues, CYPC benefits from predictable water flows and exceptionally low operating costs once infrastructure is built. The company's state-owned enterprise status ensures preferential access to transmission infrastructure, regulatory approvals, and financing at favorable terms. However, this dominance comes with limitations: geographic concentration in the Yangtze River basin creates vulnerability to regional drought conditions, while the finite nature of viable hydropower sites constrains organic growth opportunities. The company's competitive moat is primarily geographic and regulatory rather than technological, as hydropower technology is mature and widely available. CYPC's main competitive threats come not from direct hydropower competitors but from alternative energy sources (solar, wind, nuclear) gaining scale and policy support, though its low-cost base positions it well in electricity market competition.

Major Competitors

• China Resources Power Holdings Co., Ltd. (0836.HK): As one of China's largest power producers, CR Power operates diversified generation assets including coal-fired, wind, solar, and hydropower plants. While it lacks CYPC's scale in hydropower specifically, its fuel diversification provides resilience against regional droughts that could affect CYPC. However, CR Power faces higher operating costs and carbon transition risks from its coal-fired assets, making it less attractive from an ESG perspective compared to CYPC's pure-play renewable profile.
• Huaneng Power International, Inc. (0902.HK): Huaneng is China's largest listed power generator with extensive coal-fired capacity alongside growing renewable investments. Its competitive strength lies in nationwide presence and scale, but it carries significant transition risk as China decarbonizes. Unlike CYPC's stable hydropower cash flows, Huaneng's earnings are volatile due to coal price fluctuations and environmental compliance costs. The company is investing heavily in renewable transition but will take years to match CYPC's clean energy credentials.
• China Huaneng Group Co., Ltd. (600011.SS): As the parent company of Huaneng Power International, China Huaneng Group is one of China's Big Five power generators with diversified assets across thermal, hydro, wind, and nuclear power. While it possesses some hydropower capacity, it lacks CYPC's concentrated scale and expertise in large-scale hydropower operations. The group faces similar transition challenges as other thermal-heavy generators, though its nuclear and renewable investments provide growth avenues that CYPC cannot easily pursue due to its hydropower specialization.
• China Huadian Corporation Ltd. (600027.SS): China Huadian operates one of China's largest power generation portfolios with significant coal-fired capacity alongside growing renewable assets. While it has hydropower operations, they are geographically dispersed and smaller in scale compared to CYPC's Yangtze River dominance. Huadian's competitive position is hampered by high exposure to coal power, though the company is actively developing renewable projects. Its broader geographic diversification provides some advantage over CYPC's regional concentration risk.
• State Power Investment Corporation Limited (600795.SS): SPIC is notable for its leadership in nuclear power and significant renewable energy investments, making it one of China's cleaner major power generators. While it operates hydropower assets, they are not comparable to CYPC's scale. SPIC's competitive advantage lies in its nuclear expertise and diversified clean energy portfolio, positioning it well for energy transition. However, it lacks CYPC's operational efficiency in hydropower and doesn't benefit from the same geographic monopolies.