Jinwu Financial News | According to Guoxin Securities Research, in the first quarter, Longyuan Electric (00916)'s revenue was 9.877 billion yuan (RMB, same below), up 0.10% year on year. Among them, wind power division revenue was 7.376 billion yuan, down 4.70% year on year, thermal power division revenue was 1,976 billion yuan, up 3.28% year on year, and revenue from other divisions was 525 million yuan, up 146.45% year on year. The bank expects that due to the expansion of market-based electricity transactions and the increase in affordable projects, the decline in average feed-in electricity prices for wind power and photovoltaics in the first quarter was the main reason that dragged down the company's revenue growth.
According to the bank, by the end of '23, the company had nearly 10,000 units of 1.5 MW and below, accounting for 68% of the total number of units in operation. The company plans to implement a “big to small” strategy in the next few years by dismantling old small units and replacing them with modern units with larger stand-alone capacity. In the process of implementing the “big to small” plan, the company may face the risk of accruing impairment, which may put some pressure on the company's financial statements in the short term. However, from a long-term perspective, this strategy will help optimize the company's overall asset structure and increase operating profit margin.
The bank estimates that the company's revenue for 24-26 will be 410.1/450.6/50.06 billion yuan, and net profit attributable to equity holders of the Company will be 81/91.9/10.25 billion yuan, respectively. Earnings per share are 0.97/1.10/1.23 yuan/share, respectively. The price-earnings ratio corresponding to the current stock price is 5.78/5.11/4.58X, respectively. As a leading company in wind power operations, the company's installed energy capacity is expected to peak. Major shareholders will continue to inject new energy assets, and the valuation level is expected to increase. Maintain a “buy” investment rating and give a target price of HK$11, corresponding to PE10.5X in 2024.