gauntletvideogame| Longyuan Power Wind Farm Utilization Rate Lower Than Expected Citigroup lowers profit forecast and raises target price

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Citi reported that Longyuan Power's wind power utilization rate in the first four months fell short of expectations and lowered its 2024 profit forecast by 7%gauntletvideogame.3%, but raised its target price to HK$8. The company's average annual wind power price has dropped, and renewable energy prices are expected to remain stable in 2024.

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Citibank in the latestgauntletvideogameThe research report pointed out that Longyuan Power's net profit forecast for 2024 will be lowered by 7.3%, mainly due to the lower-than-expected performance of its wind farm utilization rate year-to-date. Despite this, the bank still maintained its "buy" rating on Longyuan Power and raised its target price from HK$6.1 to HK$8, an increase of 31.1%. Longyuan Power's capital expenditure forecast has also been lowered, and capital expenditure is expected to decrease by 7% to 28 billion yuan in 2024. The adjustment was based on declines in market prices for solar modules and wind turbine generators, reaching 10 to 11% and more than 5%, respectively. Citibank believes that by reducing capital expenditures, Longyuan Power can effectively improve cash flow. The report also mentioned that Longyuan Power's average wind power price dropped by 5.6% year-on-year. This change was mainly due to the increase in the market-based electricity price sales mix and the shift of more capacity combinations to affordable power generation. In addition, although annual sales tariffs have been determined, further tariff reductions in 2024 are expected to be limited. At the same time, taking into account historical wind speed trends in North China, Longyuan Power's sales mix in the second to third quarters is generally low. Finally, Citibank expects Longyuan Power's average renewable energy electricity price in 2024 to remain at the same level as in the first quarter, despite the above challenges.