Huayuan Securities: Maintains a "buy" rating on China Longyuan Power Group Corporation (00916) as depreciation of old units expires and releases performance.

HuaYuan Securities released a research report stating that China Longyuan Power Group Corporation (00916) has released its third quarter report for 2025. The company achieved revenue of 22.2 billion yuan and net profit attributable to shareholders of 4.393 billion yuan in the first three quarters, whereas the non-GAAP net profit attributable to shareholders was 4.292 billion yuan. In the third quarter alone, the company achieved revenue of 6.564 billion yuan and net profit attributable to shareholders of 1.018 billion yuan, whereas the non-GAAP net profit attributable to shareholders was 1.005 billion yuan. Taking into account the latest policies on wind power value-added tax, it is estimated that the net profit attributable to shareholders for 2025-2027 will be 6.2 billion yuan, 6.3 billion yuan, and 6.9 billion yuan respectively. The current stock price corresponds to PEs of 9/9/8 times and the "buy" rating is maintained. HuaYuan Securities' main points are as follows: Stable new energy electricity prices in the third quarter, performance released due to the depreciation of old units The company's revenue declined in the first three quarters mainly due to the divestment of thermal power in the same period last year. According to the Hong Kong stock financial report, the revenue from continuing operations increased slightly year-on-year. The decline in profits in the third quarter of the company was mainly due to the divestment of thermal power in the same period last year, which resulted in investment gains. The operation of the new energy business is stable, although the on-grid electricity price of new energy has decreased due to market entry impact, the company's new installed capacity has offset some of the decline. In addition, the company's operating costs in the third quarter decreased by approximately 300 million yuan compared to the second quarter, mainly due to the expiration of depreciation of old units, contributing to profit growth. In terms of other operating data, according to the company's announcement, as of the end of September 2025, the company's controlled installed capacity reached 43.42 million kilowatts, an increase of 17% year-on-year; of which wind power and photovoltaic power installed capacity were 31.54 million kilowatts and 11.87 million kilowatts respectively, increasing by 11% and 49% respectively. According to the announcement, the company's power generation in the first three quarters was 56.5 billion kilowatt-hours, a decrease of 0.53% year-on-year, and an increase of 13.81% year-on-year excluding the impact of thermal power. Among them, wind power and photovoltaic power generation were 46.2 billion and 10.4 billion kilowatt-hours respectively, with year-on-year growth rates of 5.3% and 77.98% respectively. According to the announcement, the wind power utilization hours in the first three quarters were 1511 hours, which decreased by 95 hours year-on-year, mainly due to the decrease in wind speed. Combining the income and electricity data of the company's different segments, it is estimated that the on-grid electricity price for wind power in the third quarter was 0.4283 yuan/kWh (including tax) (considering a 2.2% factory utilization rate), which was basically stable and slightly increased compared to the second quarter of this year; the on-grid electricity price for photovoltaic power in the third quarter was 0.2627 yuan/kWh (excluding tax) (without considering the factory utilization rate), which was basically stable and slightly decreased compared to the second quarter of this year. The company plans to raise 5 billion yuan through A-share offering, with expectations of improved cash flow from national subsidies The company announced the 2025 plan to issue A shares to specific investors, intending to issue 361 million shares and raise 5 billion yuan for the 500,000 kilowatt Hai Feng project in Hainan (25 billion yuan) and the 1 million kilowatt wind power project (25 billion yuan) in Ningxiang DC. This A-share offering is expected to alleviate the company's wind power investment pressure. Additionally, the current valuation level of A-shares (1.87x PB on November 3rd) is much higher than that of H-shares (0.74x PB), making this A-share offering potentially more efficient. In terms of other financial data, as of the end of September this year, the company's receivables financing was 42.7 billion yuan, a decrease of 6.5 billion yuan from the end of June. Combined with the company's operating cash flow, it is expected that the subsidy payments for renewable energy will significantly increase in the third quarter. Risk warning: Changes in subsidy policies, changes in market-oriented policies for new energy, and changes in policies related to "backing small with large"