中国龙源电力：H/A股买入，基本面疲软但估值具吸引力

EquitiesElectric Utilities H/A: Buy/Buy:Weak fundamentals but attractivevaluation China ◆Earnings are underpressure on power tariff cuts andutilisation, despite potential improvement in 2027-28… H: MAINTAIN BUY TARGET PRICE(HKD)8.60SHARE PRICE(HKD)7.13 ◆…yet, weakness in fundamentalsisknown and notakeydriverto share price; watch forpotentialpolicycatalysts ◆Retain Buy on H/Ashares on valuation;lowerH/ATPstoHKD8.60/RMB20.70 (from HKD9.10/RMB22.10) Earnings weaknesslikely to persist in 2026:Longyuan reported net profit ofRMB4,526m for 2025 (downby29% y-o-y), based on PRC GAAP reporting, laggedconsensus and our estimate. Stripping out discontinued operations (thermal power), profitafter tax was-28% y-o-y in 2025 and-83% in 4Q25. This was attributed to ongoingweakness in wind power utilisationsand power sales tariffs, as well as higher operating Maintain Longyuan H/A on valuation; policies are catalysts to watch:We cut ourearnings for 2026-27e by 13-23% following 2025 results and lower our DCF-based TPsfor Longyuan H/A to HKD8.60/RMB20.70 (from HKD9.10/RMB22.10). We expect China’spower market to remain oversupplied in 2026, keeping downward pressure on powerprices. That said, we see new sources of demand emerging–particularly data centresand green fuels–which should help reset power prices in 2027–28. Historically, earnings MARKET DATA Evan Li*Head, Asia Energy Transition ResearchThe Hongkong and Shanghai Banking Corporation Limitedevan.m.h.li@hsbc.com.hk Summary of segment results and key guidance (all y-o-y unless specified): ◆Power generation:On-grid power generation volume for wind power was flat as newcapacity was offset by grid curtailments and drop in utilisations (downby6%), whilesolar power generation wasup by63%. On-grid tariff for wind power was-10% toRMB475/MWh (incl. VAT), while that for solar was-5% to RMB318/MWh, due to Shayla Xu*Associate, Asia Energy Transition The Hongkong and Shanghai Banking Corporation Limitedshayla.b.xu@hsbc.com.hk+852 2288 7378 * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and isnot registered/ qualified pursuant to FINRA regulations ◆Capacity additionsfor wind and solar amountedto1.7GWand3.1GW respectivelyin 2025. Guidance for 2026is set at4.5GWand over 90% of new projects will be HSBC Global Investment Summit 14 to 16 April 2026 Subsidies:Longyuan collected RMB12bn of renewable energy subsidies in 2025(2024: RMB5bn),which should help it finance new projects. Find out more Issuer of report:The Hongkong and ShanghaiBanking Corporation Limited Disclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part ofit. View HSBC Global Investment Research at:https://www.research.hsbc.com Financials & valuation Source: HSBCNote:Priced at close of 31 Mar 2026 FY25 results review Estimates revisions and changes to target price ◆We update 2025 actuals based on available information.We lift assumptions for operatingexpenses and income tax rate based on 2025 actuals. ◆Wenow assume 0.3GW (from1.7GW) of new solar capacity and 4.2GW (from 3.0GW) ofnew wind capacity for 2026 based on the latest guidance.Our assumptions for wind andsolar capacity (total) are lowered by 1% for 2026-27. ◆We lower our assumptions for wind and solar utilization hours for 2026-27e by3%-4% aswe assume higher grid curtailments based on 2025a.Hence, our assumptions for power ◆Weupdateourpower tariff assumptionsfor wind and solar based on 2025actuals. On ablended basis, werevise our assumption for power tariff by-2%/1% for 2026/2027.We nowassume power tariffs for the company to be downby5%y-o-yin 2026and upby1% y-o-y ◆Correspondingly, wecutour 2026-27e earnings forecasts by23% and13%, respectively. ◆We introduce our 2028eforecasts. ◆Our DCF-based TPs arecuttoHKD8.60/RMB20.70(fromHKD9.10/RMB22.10), implying20.6%/24.1% upsidesfrom current levels. We maintain our Buy ratings on Longyuan-H/A Where is Longyuan on the Energy Transition journey? Longyuanhasdisposed of 1.2GW of coal power capacity in August 2024andhasdeconsolidated the remaining0.7GW of coal power capacityin end-2024.As a recap, coal-related business accounted for c19% of its revenue as of 2023before the deconsolidation. Valuation and risks Disclosure appendix Analyst Certification The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s)whose name(s)appear(s) as author of an individual section or sections of the report and any analyst(s) named as the coveringanalyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) orissuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other Important disclosures Equities: Stock ratings and basis for financial analysis HSBC and its affiliates