CHINA LONGYUAN(00916)2024-11-21 03:02Investment Rating - Investment rating: Not available [3] Core Views - The report indicates that Longyuan Power has shown marginal improvement in its Q3 2024 performance, with a focus on increasing high-quality renewable energy assets while disposing of thermal power assets. The company has added 2.7 GW of new renewable capacity and disposed of 1.2 GW of thermal capacity year-to-date. It plans to acquire 2 GW of high-quality renewable assets from its controlling shareholder, China Energy Group, which is expected to enhance its valuation [9][10]. Financial Performance Summary - For Q3 2024, Longyuan Power reported a revenue decrease of 9.8% year-on-year to RMB 7.47 billion, while operating profit increased by 13.3% to RMB 2.89 billion, and net profit surged by 29.9% to RMB 1.65 billion. For the first three quarters, revenue decreased by 6.4% to RMB 26.35 billion, operating profit fell by 10% to RMB 10.04 billion, and net profit decreased by 11.4% to RMB 5.67 billion. The Q3 net profit growth indicates a significant improvement compared to the first half of the year [10]. Operational Highlights - As of September 30, 2024, Longyuan Power's total installed capacity was 37 GW, with wind power accounting for 28.4 GW, thermal power at 660 MW, and other renewable sources at 8 GW. The company has actively increased its renewable capacity while reducing thermal power assets, with a focus on wind and solar projects [10]. Acquisition Plans - Longyuan Power announced plans to acquire renewable power generation assets from China Energy Group, including eight companies with a total installed capacity of 2.03 GW, of which 1.45 GW is operational and 0.58 GW is under construction. The acquisition price is set at RMB 1.69 billion, reflecting the company's strategy to integrate high-quality renewable assets [10]. Market Valuation - The current valuation for Longyuan Power is approximately 7 times the expected PE for 2025. The report suggests that the company is well-positioned to capitalize on the wind power construction window and has expectations for asset injections from its controlling shareholder, indicating potential for valuation enhancement [10].