Company Reports

In the first half of 2026, net profit at China Longyuan, China Three Gorges Renewables, and Datang Renewable fell 28%, 68%, and 59% year over year, respectively.

Datang Renewable is one of China’s earliest renewable fuel source independent power producers. With wind power accounting for more than 70% of total installed capacity as of the end of 2025, DR is poised to benefit from China’s plans to cut carbon-based pollution and ambitious targets in renewable power development. However, the company’s high financial leverage has been hindering its growth.

China power utilities under our coverage have fallen more than 15% on average year to date, reversing a 3% gain in the first quarter, when optimism over artificial intelligence-driven data center power demand boosted sentiment.

China Three Gorges Renewables’ 2025 net profit fell 39% year on year, while its first‑quarter 2026 net profit declined 57%. Datang Renewable’s (including interest on perpetual notes and bonds) and China Longyuan’s first‑quarter net profit fell 51% and 14%, respectively.

Datang Renewable is one of China’s earliest renewable fuel source independent power producers. With wind power accounting for more than 70% of total installed capacity as of the end of 2025, DR is poised to benefit from China’s plans to cut carbon-based pollution and ambitious targets in renewable power development. However, the company’s high financial leverage has been hindering its growth.

Datang Renewable’s 2025 net profit fell 33%, while China Three Gorges Renewables’ preliminary net profit declined 40%, underscoring continued earnings pressure across the renewable energy sector.

Share prices of the China power utilities under our coverage have fallen by about 3% on average since late October, following the release of third-quarter results. This contrasts with an average 6% rise in the third quarter due to accelerated subsidy collections.

China Three Gorges Renewables' and Datang Renewable's cumulative nine-month net profits fell by 15% and 12%, respectively, despite total power generation increasing by 8% and 12%.

Datang Renewable is one of China’s earliest renewable fuel source independent power producers. With wind power accounting for about 77% of total installed capacity as of the end of 2024, DR is poised to benefit from China’s plans to cut carbon-based pollution and ambitious targets in renewable power development. However, the company’s high financial leverage has been hindering its growth.

China Three Gorges Renewables' and Datang Renewable's first-half 2025 net profit fell by 5% and 3%, respectively, despite total power generation rising by 9% and 10%.

Datang Renewable is one of China’s earliest renewable fuel source independent power producers. With wind power accounting for about 77% of total installed capacity as of the end of 2024, DR is poised to benefit from China’s plans to cut carbon-based pollution and ambitious targets in renewable power development. However, the company’s high financial leverage has been hindering its growth.

China Three Gorges Renewables saw its 2024 net profit decline by 15% year on year, while its first-quarter 2025 net profit rose by 1%. Meanwhile, Datang Renewable's first-quarter 2025 net profit (including interest on perpetual notes and bonds) fell by 4%.

Despite total power generation rising 2% year on year in 2024, Datang Renewable's net profit fell 14%, largely due to higher operating expenses. Lower impairment losses partly offset a decline in average tariff.

Datang Renewable is one of China’s earliest renewable fuel source independent power producers. With wind power accounting for about 77% of total installed capacity as of the end of 2024, DR is poised to benefit from China’s plans to cut carbon-based pollution and ambitious targets in renewable power development. However, the company’s high financial leverage has been hindering its growth.

After a short rally following China's stimulus announcement on Sept. 24, share prices of our China power utilities coverage retreated by about 20% on average since early October, as the market is likely disappointed with the lack of further government supportive measures.

Despite respective cumulative nine-month year-on-year total output growth of 31% and 2% for China Three Gorges Renewables and Datang Renewable, their earnings both fell 6% and 17% during the same period.

We cut our fair value estimates of China Longyuan and Datang Renewable by 23% and 15%, respectively, to HKD 7.60 and HKD 1.62 per share to account for their weak first half. Overall, we expect to see slower earnings growth due to rising curtailments and lower tariffs. Consequently, we reduce our 2024-26 earnings forecasts for Longyuan by 22%-30% and for DR by 6%-24%. After the revisions, we think DR is overvalued, given its poorer asset quality that will continue to see higher curtailment risk. Meanwhile, Longyuan is still undervalued—although we think its recent run of underperforming expectations could sideline investor interest in the near term. Progress on subsidy settlements remains slow, but we expect improved collection in the second half, in line with the historical trend.

Datang Renewable is one of China’s earliest renewable fuel source independent power producers. With wind power accounting for about 84% of total installed capacity as of the end of 2023, DR is poised to benefit from China’s plans to cut carbon-based pollution and ambitious targets in renewable power development. However, the company’s high financial leverage has been hindering its growth. Over the past 10 years, DR’s wind capacity rose at an average of 9% per year, lagging industry average of 19%.

The year-to-date share price performance of China utilities under our coverage have generally staged a strong recovery since May, given improving sentiment in the Hong Kong equity market and their cheap valuations. In addition, the market is expecting more positive policy measures from the upcoming third plenary session in July. We have seen the National Energy Administration calling for increased investment in the national grid recently to avoid curtailment risk on the back of the significant rise in renewable energy capacity. While we are positive about this in the longer term, we caution that the concerns about slow subsidy settlements and falling tariffs will remain in the near term.

We cut our fair value estimate for no-moat Datang Renewable to HKD 1.90 per share from HKD 2 after factoring in a lower average tariff, which reduced our 2024-26 earnings estimates by an average of 2%. Based on a 2024 price/book ratio of 0.3 times and price/earnings of around 4.3 times, DR looks inexpensive. However, its high debt remains a concern, and we think DR is fairly valued. Our top pick in renewable energy is China Longyuan, given its leadership position and strong execution record. With slow subsidy settlements and concerns about declining tariffs, we believe renewable energy stocks' price performance could remain lackluster in the near term.