The wind power generation capacity of Datang Renewable Energy increased 2.1% year-on-year to 4,997 gigawatt-hours in the first quarter of 2019, and the estimated number of quarterly utilization hours remained flat at 566 hours over the same period last year. The performance of wind power generation and utilization hours in the first quarter of 2019 was in line with expectations. Due to the weakening of average wind speed and the high base effect last year, the year-on-year growth rate of power generation slowed markedly. However, the steady decline in the power limit rate will still support the company's utilization hours. We expect the company's wind power generation growth rate to be around 6.4% throughout 2019.

The company's net profit attributable to parent company owners rose 66.2% year-on-year in 2018, lower than expected. Net profit per share was lower than our previous forecast of 18.1%. In 2018, the company's revenue increased 17.1% year on year, and electricity sales revenue increased 16.9% year on year. Total operating costs increased 8.2% year over year. The company's new installations in 2018 were significantly lower than its previous guidelines, but the associated staff costs and maintenance costs continued to record double-digit increases. At the same time, we have seen an increase in the accounts receivable of Datang New Energy as a share of total revenue, which may have a negative impact on the company's future profitability.

Datang Renewable Energy's investment rating was downgraded to “collection” and the target price was lowered to HK$1.20. Since the company plans to step up its project development efforts before the Internet is affordable, impairment losses may continue to occur in the future if progress falls short of expectations. At the same time, in the case of high leverage and large accounts receivable balances, rising capital expenses will put more pressure on the company's cash flow situation. We lowered Datang Renewable Energy's earnings forecast per share for 2019/2020/2021 to RMB 0.197/$0.209/ $0.231 respectively. The current target price is equivalent to a price-earnings ratio of 5.2 times/4.9x/4.4 times the 2019/2020/2021 price-earnings ratio.