Guotai Haitong Securities has issued a research report maintaining an "Add" rating on DATANG RENEW (ASX: 01798) with a target price of HK$1.95.
The firm projects the company's EPS for 2026-2028 to be RMB 0.1/0.1/0.1. At its current market capitalization, the stock trades at a 2026 P/E of 10.4x and a PB(MRQ) of 0.39x. The low PB valuation is considered an advantage, especially when compared to the industry peer average PB(MRQ) of 0.62x. Applying a target PB multiple of 0.6x and an exchange rate of 1 HKD = 0.86 CNY yields the target price of HK$1.95. The key points from Guotai Haitong Securities' analysis are outlined below.
Financial Performance Overview
In 2025, the company reported core operating revenue of RMB 12.6 billion, remaining flat year-over-year. After deducting perpetual bond interest, attributable net profit was RMB 1.21 billion, a decrease of 37.0% compared to the previous year. For the first quarter of 2026, core operating revenue was RMB 3.09 billion, down 13.1% year-over-year, with attributable net profit at RMB 500 million, reflecting a 51% decline.
Profit Per Unit Declined in 2025
Unfavorable wind resources combined with a drop in electricity tariffs led to a decrease in profit per kilowatt-hour in 2025. The firm estimates the company's net profit per kWh for 2025 was RMB 0.042, a reduction of RMB 0.030 year-over-year. (1) Revenue per kWh in 2025 was RMB 0.373 (comprising RMB 0.390/kWh for wind and RMB 0.267/kWh for solar, representing changes of +RMB 0.026 and -RMB 0.050 per kWh respectively). The tariff decline is primarily attributed to new grid-parity projects and increased participation in the electricity market. (2) Cost per kWh in 2025 was RMB 0.275, an increase of RMB 0.006 year-over-year, mainly due to a decrease in wind power utilization hours by 315 hours and solar power utilization hours by 333 hours. (3) Financial expenses decreased, with cost per kWh down RMB 0.007 year-over-year, as the average financing cost was reduced to 2.41%.
First Quarter 2026 Unit Profit Decline
Net profit per kWh for Q1 2026 was RMB 0.061, down RMB 0.05 year-over-year. (1) Estimated revenue per kWh decreased by RMB 0.011 to RMB 0.364. (2) Estimated cost per kWh increased by RMB 0.039 to RMB 0.241 year-over-year, primarily due to a year-over-year decrease in wind power utilization hours by 82 hours to 534 hours.
Forecast for 2026
The forecast assumes new installed capacity of 500 MW each for wind and solar power. Wind power utilization hours are projected at 1,850 hours and solar at 1,150 hours, remaining roughly flat or slightly lower than the previous year. Regarding tariffs, the full implementation of policy document No. 136, which mandates renewable energy participation in market-based trading, is expected to lead to an assumed average tariff decrease of RMB 0.01 to RMB 0.363 per kWh for the full year. Cash flow analysis suggests there is still room for a reduction in financial expenses. Considering these combined factors, net profit per kWh is forecast to decline to RMB 0.034. After deducting perpetual bond interest, the attributable net profit for 2026 is projected to be RMB 725 million, corresponding to a P/E of 10.4x. The current PB(MRQ) stands at 0.39x.
Key Risks Identified
Risks include potential further declines in electricity tariffs and challenges related to the integration and consumption of new energy output.
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