Jinwu Financial News | According to BOC International Development Research Report, Longyuan Electric (00916)'s profit for the first half of the year fell 20.7% year on year to 3.99 billion yuan (RMB, same below), in line with the bank's expectations. Due to the year-on-year decline in average wind speed in the first half of the year and the increase in the electricity limit rate, the bank believes that the weak performance in the first half of the year should have been anticipated by the market.
In terms of the new installed capacity plan, the bank expects to inject 0.5/2.5/1.0 gigawatts in 2024/25/26. The total installed capacity of the company's wind and light is expected to be 7.5/10.5/10.0 gigawatts during the period (previous value was 7.0/8.0/9.0 gigawatts).
According to the bank, taking into account the impact of new installations and sales of thermal power plants above, the bank lowered the company's 2024/25 earnings forecast by 14%/20%, mainly because the decline in profit due to the sale of thermal power plants still had a major impact on the short term. The bank reiterated that it included 2.1 billion yuan of impairment per year in the 2024-26 forecast (generated by exchanging the company's old fans for small). Currently, the bank estimates that the company's profit in 2024 will drop 12% year on year and rise 8% in 2025. The bank maintained a price-earnings ratio of 9.4 times 2025, and the target price was lowered from HK$9.03 to HK$7.23 to maintain purchases. The bank believes that the parent company's project injection, installation progress, and wind speed improvements will be a catalyst for increasing valuation.
