Sou Hu Cai Jing·2025-05-06 05:35Core Viewpoint - Longyuan Power's Q1 2025 net profit decreased by 21.9% year-on-year, primarily due to the profit gap from the divestment of thermal power assets and uncontrolled operating costs [1][2] Group 1: Financial Performance - Longyuan Power's Q1 net profit decline was approximately 100 million yuan due to the divestment of thermal power business, which aligns with the company's strategy to focus on clean energy [2] - Operating expenses grew at a rate significantly higher than revenue, contributing to the profit decline [2] - The company added 34.7 MW of wind power and 1.5 MW of solar power in Q1, totaling 36.25 MW, but this increase did not effectively offset the cost pressures [2] Group 2: Market Outlook and Strategy - Jiao Yin International predicts that Longyuan Power will accelerate its installation pace before the June 1 policy deadline, aiming to add 5 GW of clean energy projects in 2025, primarily in wind power [3] - The rapid deployment of new energy projects may lead to increased equipment procurement costs and potential issues with grid absorption capacity, raising concerns about the company's ability to balance expansion with profitability [3] - The low proportion of solar installations (less than 5%) highlights the company's reliance on a single business structure, which may limit its long-term risk resilience [3] Group 3: Valuation and Market Sentiment - Jiao Yin International has lowered Longyuan Power's 2025-2026 profit forecasts by 2.4% and adjusted the target price to 7.81 HKD while maintaining a "buy" rating, reflecting a balance between short-term volatility and long-term value [4] - The current stock price corresponds to a price-to-earnings ratio of 3.17, indicating it is at a historical low, leading some investors to believe that negative factors are over-reflected [4] - Concerns remain regarding the company's profit structure post-thermal power divestment, particularly as the wind power sector faces challenges from market price reforms [4]