China’s Renewable Utilities Hit by Curtailments, Lower Tariffs, and Poor Wind Resources

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.