China Longyuan Power
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*At the time of publication

Profile

China Longyuan Power (CLYP) is China’s largest wind farm operator. As of Dec ‘23, CLYP had 35.59GW of total generation capacity, comprising 27.75/1.875/5.96GW of wind/coal/renewables capacity.

The company, previously known as China Longyuan Electric Power Group, was established on 1 March 1993, and is among the earliest SOE IPPs to engage in renewable energy development in China. Longyuan was listed on the Hong Kong Stock Exchange on 10 December 2009 and is parent China Energy Investment Corporation’s sole platform to develop and operate wind farms.

Previous Close Price

Key Statistics

Dec RMB mn20232024f2025f
Revenue37,63836,19131,989
Net Profit8,3117,1857,952
Profit Gth (%)19.6(13.5)10.7
PE (X)8.7x7.5x6.8x
Div Yield (%)3.544.4
P/BV (X)0.8x0.7x0.7x
Source: Analec ( At the time of publication )

Recent Developments

Our Views

Leading wind operator in China. China Longyuan Power (CLYP) is China’s largest wind farm operator. As of Sept ‘24, CLYP had 37.0GW of total generation capacity, comprising 28.4/0.66/8.0GW of wind/coal/renewables capacity. It targets to add at least 30GW of renewable power capacity in 2021-25, to ride on China’s decarbonisation journey. Besides regular CAPEX, CLYP also acquires new capacity from its parent CHN Energy.

Growth underpinned by capacity expansion in 14th Five-year plan (FYP). After recent asset injections of 2GW from parent, we expect another round of 2GW soon. We estimate CLYP to add c.4.6GW/6.1GW of capacity or 13%/15% y/y in FY24/25. However, with the disposal of coal-fired units, we estimate power generation in FY24/25F will only increase by 1%/3%, while net profit (ex-impairments) is forecast to decline 14% in FY24 before rising 11% in FY25 along with reduction in operating expenses post disposal of coal-fired units. 

Government policies to alleviate pressure on tariff and curtailment rate. Recent guiding opinion has demonstrated government’s strategic decision to increase adoption of renewable energy. Thus, we expect more policies will be released to resolve the major issues in the sector, such as declining electricity tariff and climbing curtailment rate. In fact, we are seeing more revenue from trading of carbon credits for CLYP, as a result of the active carbon market following the government’s new rules. Government initiatives will be share price catalysts.

Upgrade/maintain H/A-share to BUY/HOLD with higher TPs of HKD7.80/RMB19.00. CLYP’s H-shares trade at around 6.6x FY25F P/E, 1SD below the average of c.12.6x since 2020. We upgrade our H-share rating to BUY with a TP of HKD7.80, based on a higher 12-month rolling PE of 8x (or unchanged -0.5SD from historical average PE) to reflect more supportive policies to resolve curtailment issue and tariff downtrend, to improve market sentiment. We maintain our HOLD rating on an A-share with a higher TP of RMB19.00, based on 20x 12-month rolling PE or -1SD from historical average PE.

Risks

Strong number of new installations will raise curtailment rate.
Increase market based transactions will lead to downward pressure on tariffs.

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Note: All views expressed are current as at the stated date of publication.

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