Citigroup: Maintains "Buy" rating on China Longyuan Power Group Corporation (00916) with a target price of 7.1 Hong Kong dollars.

Citigroup released a research report stating that it maintains a "buy" rating for China Longyuan Power Group Corporation (00916) with a target price of 7.1 Hong Kong dollars. The company's total electricity generation in May increased by 1.5% year-on-year to 6.68 billion kilowatt-hours, with wind power and CECEP Solar Energy generation increasing by 8.7% and 74.8% respectively, mainly due to the increase in capacity. As the company will sell all coal-fired power plants in the second half of 2024, the coal-fired power generation in May was zero, compared to 830 million kilowatt-hours in the same period last year. The report pointed out that the total electricity generation in the first five months of this year decreased by 1.5% year-on-year to 33.87 billion kilowatt-hours, with wind power and CECEP Solar Energy generation increasing by 6.4% and 64.4% respectively, but not fully offsetting the decrease in coal-fired power generation. The bank estimated that the average utilization hours of China Longyuan Power Group Corporation's wind farms in May decreased by 0.8% year-on-year to 182 hours, and by 2.9% year-on-year to 958 hours in the first five months, mainly affected by weakened wind speeds and grid curtailment. The regions with the highest growth in wind power output in May were Shanxi (64% increase), Henan (50% increase), and Jiangxi (47% increase), while Fujian and Xinjiang decreased by 34% and 33% respectively. The bank believes that the decline in the monthly competitive bidding electricity price in Jiangsu Province has limited impact on China Longyuan Power Group Corporation. In June, the competitive bidding electricity price in Jiangsu Province decreased by 23.7% year-on-year to 312.8 yuan per megawatt-hour, with a total electricity generation of 4.88 billion kilowatt-hours participating in bidding, of which wind power accounted for only 0.06 billion kilowatt-hours or 1.2%. China Longyuan Power Group Corporation's wind power output in Jiangsu Province in the second quarter of 2024 and the first quarter of 2025 was 8.21 billion kilowatt-hours and 3.39 billion kilowatt-hours respectively, accounting for 9.7% and 11.6% of its total wind power output. The bank predicts that the electricity price for China Longyuan Power Group Corporation's wind power and CECEP Solar Energy will decrease by 3% and 4% respectively in 2025, but still finds its 2025 forecast price-to-book ratio of 0.7 times and 8.8% return on equity attractive.