Jinwu Financial News | According to BOC International Development Research Report, Longyuan Electric (00916)'s profit increased +2% year-on-year in the first quarter of this year, lower than the 8.2% year-on-year increase in power generation. The main factor was the year-on-year decline in wind/photovoltaic prices during the estimated period. At the results meeting, the company also frankly explained to investors the difficulties encountered in the current progress of acquiring the parent company's assets. Investors have understood how difficult it is to finance, and the bank believes that the company's explanation this time is more neutral. The bank believes that the extent to which the company increases the dividend ratio will be determined by the amount of minor deductions from generation to generation.
The bank lowered the company's 2024-26 profit forecast by about 6%, mainly reflecting the impact of the company's electricity sales price being lower than expected. The bank maintained its price-earnings ratio valuation benchmark of 8.4 times 2024 (still about 1 standard deviation below the historical average), and lowered the target price to HK$6.92 (previously HK$7.38) to maintain the buying rating. Currently, the bank believes that the company's lower than expected electricity prices have begun to be reflected in the valuation. The improvement in wind speed/new energy power limits in the second quarter will be a key factor in the short-term valuation.