China Suntien Green Energy: Initiating Coverage, HKD 3.92 Fair Value Estimate; Shares Undervalued

We are initiating coverage of China Suntien Green Energy with no-moat and stable moat trend ratings and a fair value estimate of HKD 3.92 per share. Trading at 2023 price/earnings of around 5 times, we think the shares are attractive currently, supported by decent five-year net profit CAGR of 9.6% and more than 6% dividend yield. As only about 10% of its subsidized renewable projects have yet to be included in the audited project list, we believe the impact from the ongoing subsidy audit should be limited. Meanwhile, given that the firm’s gas transmission tariff was cut in June 2022, we think further downside is unlikely in the near term.