2024-05-06 03:32Investment Rating - The report maintains a "Buy" investment rating for Longyuan Power (0916.HK) with a target price of HKD 11, indicating a potential upside of 96.08% from the closing price of HKD 5.58 as of May 2, 2024 [4]. Core Views - Longyuan Power's revenue for Q1 2024 was CNY 9.877 billion, a slight increase of 0.1% year-on-year, with a net profit attributable to shareholders of CNY 2.482 billion, up 2.59% year-on-year [2]. - The company's overall power generation increased by 8.27% year-on-year, reaching 21,225.2 GWh by the end of Q1 2024, driven by an increase in installed capacity [2]. - The report highlights a strategic shift towards larger, more efficient power generation units, which may lead to short-term financial pressures but is expected to enhance operational efficiency in the long run [2]. Financial Performance Summary - Revenue projections for 2024, 2025, and 2026 are CNY 41.01 billion, CNY 45.06 billion, and CNY 50.06 billion respectively, with expected growth rates of 8.96%, 9.88%, and 11.08% [3][8]. - Net profit attributable to shareholders is forecasted to be CNY 8.102 billion in 2024, CNY 9.187 billion in 2025, and CNY 10.254 billion in 2026, reflecting growth rates of 27.49%, 13.39%, and 11.61% respectively [3][8]. - Earnings per share (EPS) are projected to be CNY 0.97, CNY 1.10, and CNY 1.23 for the years 2024, 2025, and 2026, with corresponding price-to-earnings (P/E) ratios of 5.78, 5.11, and 4.58 [3][8]. Operational Insights - The company plans to initiate new renewable energy projects totaling 10 GW in 2024, with 7.5 GW expected to be operational [2]. - As of Q1 2024, Longyuan Power's total installed capacity reached 36.16 GW, a 16.23% increase year-on-year, with significant contributions from wind and solar energy [2]. - The report notes that the company is implementing a "large replaces small" strategy to improve operational efficiency by replacing older, smaller units with larger, modern units [2].