Bank of America Securities released a research report stating that it reiterates a neutral rating for China Longyuan Energy (00916), with a compound annual growth rate of 27% for the years 2024-2026. The target price has been raised from HKD 6.1 to HKD 7.2. The bank takes into consideration the slow capacity growth and has lowered the profit forecast for the years 2024-2026 by 30%-40%.
The report stated that China Longyuan Power's revenue in the first half of the year decreased by nearly 5% year-on-year due to a decline in wind power generation, resulting in a corresponding 6% year-on-year decline in revenue and a 20% year-on-year decline in net profit after perpetual bonds to CNY 4 billion. The bank believes that renewable energy prices and utilization rates will continue to face downward pressure, and the recent policies supporting the use of renewable energy are a good start, but the impact of more distributed solar energy entering the market for sale in the second half of the year still remains to be observed.
