2024-04-18 06:02Investment Rating - The report maintains a "Buy" rating for Longyuan Power (0916.HK) with a target price of HKD 8.16, indicating a potential upside of 48% from the current price of HKD 5.52 [2][11]. Core Insights - The company's 2023 performance was impacted by significant impairment provisions, leading to a revenue decline of 5.6% year-on-year to CNY 37.638 billion, while net profit attributable to equity holders increased by 23.9% to CNY 6.355 billion [3][8]. - The dividend per share for 2023 was CNY 0.2225, a 90% increase from CNY 0.1171 in 2022, with the payout ratio rising from 20% to 30% [3][8]. - Longyuan Power is focusing on upgrading its aging wind turbine units, with over 12 million kilowatts of units below 1.5S, and plans to upgrade an additional 10 million kilowatts, which is expected to enhance efficiency by 30-50% [5][9]. - The company has a robust project pipeline, with plans to start 10GW of new energy projects in 2024 and expects to commission 7.5GW, supported by a resource reserve of 54GW acquired in 2023 [6][10]. Summary by Sections Financial Performance - In 2023, Longyuan Power reported revenues of CNY 37.638 billion, a decrease of 5.6% year-on-year, while net profit reached CNY 6.355 billion, reflecting a 23.9% increase [3][8]. - The earnings per share for 2023 was CNY 0.7398, and the company declared a dividend of CNY 0.2225 per share [3][8]. Project Development - The company has secured a total of 54GW in new resource reserves, including 24.65GW of wind power and 23.95GW of solar power, with significant projects located in resource-rich provinces [6][10]. - Longyuan Power plans to accelerate its installation capacity, with a target of 10GW of new energy projects to commence in 2024 and 7.5GW expected to be operational [6][10]. Long-term Strategy - The ongoing upgrade of older wind turbine units is anticipated to significantly improve operational efficiency and profitability, with the cost of upgrades being lower than new installations [5][9]. - The company aims to enhance its overall profitability through these upgrades and the expansion of its renewable energy projects, which are expected to support future earnings growth [6][10].