Summary of Longyuan Power Conference Call Company Overview - Longyuan Power is a wind power business integration platform under the State Energy Group and is the largest wind power operator globally as of mid-2025, with a controlling stake of 59% held by the State Energy Group [6][12] - The group has a total installed capacity of 355 GW, with 122 GW in green energy, of which Longyuan Power accounts for 46% in wind and 19% in solar [6][12] Industry Dynamics - The domestic wind and solar installation has reached a turning point, with significant policy support leading to a recovery in cash flow for companies like Longyuan Power [2][3] - The implementation of Document No. 136 and mandatory green energy consumption policies have driven the price-to-book ratio (P/B) recovery to 0.76, although it remains at historical lows [2][12] Financial Performance - Longyuan Power's long-term return on equity (ROE) has been stable at 8%-9%, with only two years (2013 and 2022) showing declines due to external factors [7][8] - The company’s electricity price from desulfurization has decreased from 0.5 yuan per kWh in 2017 to 0.19 yuan per kWh in mid-2025, reflecting market pressures [2][9] - The company’s P/B ratio has dropped from a peak of 2.34 in September 2021 to a low of 0.52 in February 2024, with a slight rebound to around 0.76 [4][5] Cash Flow and Valuation - Longyuan Power is expected to face a free cash flow deficit of 12.1 billion yuan in 2024, but with a slowdown in conventional project development and accelerated national subsidy repayments, free cash flow may turn positive in 2025 [4][17] - The company’s accounts receivable stood at 49.5 billion yuan, representing 56% of net assets, indicating a high dependency on subsidy recoveries [18] Future Growth and Asset Development - Future growth will be supported by the injection of approximately 4 GW of green energy units from the group, upgrades to older units, and over 5 GW of offshore wind power reserves [14][15] - The company aims to add 7.5 GW of new capacity in 2024 and 5 GW in 2025, focusing on high-quality resource areas [13][14] Market Conditions and Pricing - The market for green certificates has seen a significant decline in prices, but recent policy changes have led to a recovery, with trading volumes increasing substantially [19] - The competitive advantage of wind power over solar is highlighted by better alignment with load curves and higher market prices [15] Profit Forecast - Longyuan Power's projected net profits for 2025, 2026, and 2027 are 6.43 billion yuan, 7.22 billion yuan, and 7.93 billion yuan, respectively, indicating growth rates of 0.1%, 12%, and 10% [20] Conclusion - Longyuan Power is positioned to benefit from industry recovery and policy support, with a strong asset base and growth potential despite current market pressures and historical low valuations [2][20]