First Shanghai Securities·2024-05-16 06:32Investment Rating - The report maintains a "Buy" rating for Longyuan Power (0916) with a target price of HKD 9.04, indicating an upside potential from the current price of HKD 6.54 [1]. Core Views - Longyuan Power's wind power profitability is steadily increasing, with a stable growth in annual performance. The company achieved a revenue of RMB 37.6 billion in 2023, a decrease of 5.6% year-on-year, primarily due to lower coal sales volume and prices [1]. - The company plans to enhance its project efficiency through capacity expansion and upgrades, focusing on replacing older wind turbines with newer, more efficient models [1]. - Despite short-term performance pressures from increased curtailment rates and market trading impacts, the company has a robust project reserve ensuring growth in installed capacity [1]. Financial Performance Summary - In 2023, Longyuan Power's net profit attributable to shareholders was RMB 6.2 billion, reflecting a year-on-year increase of 26.5% [1]. - The company plans to distribute a dividend of RMB 0.2225 per share, with a payout ratio of 30% [1]. - The first quarter of 2024 saw an increase in new energy installations, with a total of 562 MW added, bringing the total installed wind capacity to 27.78 GW, a 6% year-on-year increase [1]. Operational Insights - The company is expected to accelerate its new energy installations, with a target of 10 GW of new projects to be operational within the year [1]. - The report highlights that the "big replaces small" strategy will significantly enhance the profitability of older projects, with an estimated capacity for expansion of around 10 GW by the end of 2023 [1]. - Longyuan Power's overall power generation increased by 2.59% in the first four months of 2024, despite a 4.45% decrease in wind power generation hours [1].