In 2017, China's newly installed wind power capacity reached 15.03 gigawatts, down 22.1% from the same period last year. China added only 15.03 gigawatts of wind power in 2017, down 22.1% from a year earlier. The installed capacity is disappointing and lower than our earlier forecast of 18 gigawatts of new wind capacity in 2017. The cumulative installed wind power capacity in China at the end of 2017 was 163.67 gigawatts, up 10.5% from the same period last year.

It is expected that no less than 30 gigawatts of new wind power will be installed each year between 2018 and 2020. The guidance on the implementation of the 13th five-year Plan for Renewable Energy Development issued by the National Energy Administration at the end of July 2017 pointed out that 110.4 gigawatts of new wind power should be installed in China from 2017 to 2020. it means that there will be an additional installed capacity of 31.8 gigawatts per year between 2018 and 2020.

The transfer of shares in Fengsheng Holdings could be a potential privatisation deal. The company announced on January 18, 2018 that its controlling shareholder, Fengsheng Holdings, had signed a memorandum of understanding with an independent third party on a conditional voluntary partial cash offer involving more than 50% but not more than 75% of the issued shares of the company.

We maintain our "neutral" investment rating but raise the company's target price to HK $13.00. We maintain our current earnings forecast for 2017-2019, that is, net income per share is RMB 0.582, RMB 0.652 and RMB 0.739, respectively.

Our new target price is equivalent to 19.0 times / 16.9 times / 15.0 times 2017-2019 price-to-earnings ratio or 1.5 times / 1.4 times 2017-2018 price-to-book ratio.