CISI FIN: Maintain "Buy" rating on DATANG RENEW (01798), Q3 performance under pressure but significant improvement in cash flow.

CISI FIN has released a research report stating that it maintains a "Buy" rating on DATANG RENEW (01798). The company's revenue increased slightly in the first three quarters, but net profit decreased year-on-year, mainly affected by the decrease in electricity prices and credit impairment provisions. The company's solar power generation has significantly increased, especially wind power, which has grown by more than 70% year-on-year. Cash flow has greatly improved due to accelerated repayments from the government. CISI FIN's main points are as follows: Performance DATANG RENEW released its third quarter report for 2025. As of the end of the third quarter, the company achieved operating revenue of RMB 9.409 billion, a year-on-year increase of 3.56%/RMB 0.323 billion, and net profit attributable to shareholders of RMB 1.653 billion, a year-on-year decrease of 11.59%/-RMB 0.217 billion; in the third quarter alone, operating revenue was RMB 2.564 billion, a year-on-year increase of 4.25%/RMB 0.105 billion, and net profit attributable to shareholders was -RMB 0.35 billion, compared to RMB 1.05 billion in the same period last year. Pressure on performance from declining electricity prices and credit impairment provisions, with improved cash flow driven by accelerated government repayments. In the first three quarters, the company's solar power generation increased by 7.40% and 42.22% year-on-year, with solar power generation in the third quarter alone increasing by 5.13% and 71.70% respectively. The company's operating revenue in the third quarter increased by 4.25% year-on-year, and the average electricity revenue per kilowatt-hour in Q3 decreased by 0.04 yuan/kWh year-on-year, a larger decrease than in the first half of the year. The company made a credit impairment provision of RMB 1.02 billion in the first three quarters, compared to the reversal of RMB 0.38 billion in the same period last year. The company's effective tax rate increased by 3.75 percentage points year-on-year and the minority shareholder profit and loss ratio increased by 3.22 percentage points, also putting pressure on the company's performance. In terms of cash flow, as government repayments accelerate, the company's accounts receivable and notes receivable balance as of the end of the third quarter was RMB 21.6 billion, a decrease of approximately RMB 2.8 billion from the end of the first half of the year. The company's operating cash flow in the first three quarters was RMB 7.89 billion, a year-on-year increase of 54.35%, capital expenditure was RMB 4.293 billion, a year-on-year decrease of 50.91%. Based on the closing price on November 12th, the company's accounts receivable balance was approximately 130% of its total market value. Investment recommendation Maintain a "Buy" rating. Short-term performance may be under pressure due to fluctuating green electricity prices, but optimistic about the company's competitive advantage as a leading wind power company in the future and the cash flow elasticity from government subsidy repayments. Taking into account changes in the value-added tax policy, the bank predicts the company's net profit attributable to shareholders for 2025-2027 to be RMB 1.694 billion, RMB 1.751 billion, and RMB 1.911 billion, with year-on-year changes of -9.7%, +2.7%, and +7.2%, respectively. The corresponding PE valuation for November 18, 2025, is 7.3x, 7.1x, and 6.6x. Risk warning Unforeseen policy changes, significant decreases in electricity prices, sharp increases in expenditure in the auxiliary services market, rising raw material prices, and macroeconomic risks.