CISI FIN: Maintains "Buy" rating on China Longyuan Power Group Corporation (00916), accelerated cash flow improvement driven by government subsidies.

CISI FIN released a research report stating that it maintains a "buy" rating for China Longyuan Power Group Corporation (00916). The company's revenue in Q3 increased year-on-year, but due to fluctuations in green electricity prices and the high base effect of disposing of thermal power assets in the same period last year, the net profit attributable to shareholders decreased year-on-year. The accelerated recovery of national subsidies has significantly increased operating cash flow by 53.33%. The company's wind power generation has steadily increased, and photovoltaic generation has seen a significant year-on-year increase, despite short-term performance pressure. The company's offshore wind and large projects in reserve provide support for medium to long-term growth. CISI FIN's main points are as follows: Performance In the first three quarters, China Longyuan Power Group Corporation achieved operating income of 22.221 billion yuan, a year-on-year increase of 17.29%, and a net profit attributable to shareholders of 4.393 billion yuan, a year-on-year decrease of 21.02%. Operating cash flow was 15.784 billion yuan, a year-on-year increase of 53.33%. In Q3 alone, operating income was 6.564 billion yuan, a year-on-year decrease of 13.98%, with a net profit of 1.018 billion yuan, a year-on-year decrease of 38.19%. The gross profit margin in Q3 was 34.91%, a year-on-year increase of 2.64% and a quarter-on-quarter decrease of 4.09%. Operating cash flow was 9.111 billion yuan, a year-on-year increase of 224%, mainly due to accelerated national subsidy recovery. By the end of Q3, the company's accounts receivable accumulated to 43 billion yuan, a decrease of 6 billion yuan from the end of the first half of the year. Investment income in the third quarter was -0.11 billion yuan, compared to 5.14 billion yuan in the same period last year due to the disposal of thermal power assets. Operating Data In the first three quarters, the company's wind power utilization hours were 1,511 hours, a year-on-year decrease of 95 hours, including a year-on-year decrease of 27 hours in Q3 alone. The company added 1.13 million kilowatts of wind and solar installations in the first three quarters, with additions of 150,000 and 70,000 kilowatts in Q3 alone, showing a slowdown in growth. The company's electricity generation in the first three quarters was 56.547 billion kilowatt-hours, a year-on-year decrease of 0.53%, excluding the impact of thermal power asset disposals. Wind power generation increased by 5.30% year-on-year, and photovoltaic generation increased by 77.98% year-on-year. In the third quarter alone, wind power generation increased by 3.33% year-on-year, and photovoltaic generation increased by 88.61% year-on-year, with wind power generation growth mainly in the northwestern regions of Qinghai and Xinjiang, as well as coastal provinces such as Hainan and Fujian. Corresponding to the sector's revenue, wind power and photovoltaic sector revenues in the first three quarters were 19.144 billion and 2.806 billion yuan, a year-on-year decrease of 1.82% and an increase of 64.82% respectively. The revenue per kilowatt-hour was 0.41 and 0.27 yuan, a year-on-year decrease of 0.030 and 0.022 yuan, and in the third quarter alone, wind power and photovoltaic sector revenues decreased year-on-year by 2.4% and increased by 63.6%, with revenue per kilowatt-hour decreasing year-on-year by 0.025 and 0.040 yuan. Profit Forecast Short-term performance is under pressure due to fluctuations in green electricity prices and the high base effect of disposing thermal power assets last year, but the company's in-hand projects such as offshore wind and large projects support medium to long-term growth prospects. The company is seen to have a first-mover advantage as a leading wind power company with market competitive advantages, and it is expected to benefit from industry valuation recovery in the future. Considering changes in the value-added tax refund policy, the bank predicts that the company's net profit attributable to shareholders for 2025-2027 will be 5.690 billion, 6.130 billion, and 6.592 billion yuan respectively, with year-on-year changes of -11.4%, +7.7%, and +7.5%. Corresponding to the market value of Hong Kong stocks on November 18th, the PE ratios are 9.5x, 8.8x, 8.2x. Risk Warning Risks include policy changes below expectations, a significant increase in raw material costs, fluctuations in resource endowments, unexpected declines in electricity prices, accounts receivable recovery below expectations, and macroeconomic fluctuations.