CISI FIN released a research report maintaining an "Overweight" rating on CHINA LONGYUAN (00916). While Q3 revenue showed year-on-year growth, net profit attributable to shareholders declined due to fluctuations in green power volume and pricing, as well as a high base effect from the disposal of thermal power assets in the same period last year. Accelerated recovery of state subsidies drove a 53.33% surge in operating net cash flow. The company demonstrated steady growth in wind power generation, while solar power output saw a sharp year-on-year increase, emerging as a highlight. Despite short-term earnings pressure, its offshore wind and large-scale base projects support medium- to long-term growth. Key insights from CISI FIN are as follows:
**Performance Overview** For the first three quarters, CHINA LONGYUAN reported revenue of RMB 22.221 billion (+17.29% YoY), net profit attributable to shareholders of RMB 4.393 billion (-21.02% YoY), and operating net cash flow of RMB 15.784 billion (+53.33% YoY). In Q3 alone, revenue stood at RMB 6.564 billion (-13.98% YoY), with net profit at RMB 1.018 billion (-38.19% YoY). Q3 gross margin was 34.91% (+2.64 ppts YoY, -4.09 ppts QoQ), while operating net cash flow surged 224% YoY to RMB 9.111 billion, primarily due to faster state subsidy recoveries. As of end-Q3, accounts receivable totaled RMB 43 billion, down RMB 6.5 billion from mid-year. Q3 investment losses were RMB 0.011 billion, compared to a gain of RMB 0.514 billion from thermal asset disposals in the prior-year period.
**Operational Data** Wind power utilization hours for the first nine months were 1,511h (-95h YoY), with Q3 alone down 27h YoY. New wind and solar capacity additions totaled 1.13GW and 1.17GW respectively in 9M, slowing to 0.15GW and 0.07GW in Q3. Total power generation reached 56.547B kWh (-0.53% YoY), adjusted for thermal asset disposals: wind power output rose 5.30% YoY, while solar generation jumped 77.98%. Q3 wind and solar output grew 3.33% and 88.61% YoY, with wind gains concentrated in northern regions (Qinghai, Xinjiang) and coastal provinces (Hainan, Fujian). Segment-wise, 9M wind and solar revenues were RMB 19.144 billion (-1.82% YoY) and RMB 2.806 billion (+64.82% YoY), with per-kWh income at RMB 0.41 (-RMB 0.030 YoY) and RMB 0.27 (-RMB 0.022 YoY). Q3 segment revenues declined 2.4% for wind but rose 63.6% for solar YoY, with per-kWh income down RMB 0.025 and RMB 0.040 respectively.
**Earnings Forecast** Short-term performance remains pressured by green power volatility and high comparables, but offshore wind and large-scale projects underpin long-term growth. The report highlights CHINA LONGYUAN’s first-mover advantages and competitive positioning as a leading wind player, poised to benefit from sector valuation recovery. Factoring in VAT refund policy adjustments, CISI FIN projects 2025–2027 net profits at RMB 5.690 billion (-11.4% YoY), RMB 6.130 billion (+7.7%), and RMB 6.592 billion (+7.5%), implying Hong Kong market P/Es of 9.5x, 8.8x, and 8.2x as of November 18.
**Risks** Potential policy delays, sharp rises in raw material costs, resource volatility, steeper-than-expected tariff declines, slower receivable collections, and macroeconomic fluctuations.
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