Wind power installations in the first five months of 2019 were flat year over year and reached 6.88 gigawatts. According to data from the China Telecommunication Union, the total number of new power generators installed in China in the first five months of 2019 reached 29.18 gigawatts, a decrease of 5.22 gigawatts over the previous year. During the period, thermal power/hydropower/nuclear power/windpower/solar power increased by 11.76 gigawat/1.28 gigawat/1.25 gigawat/6.88 gigawat/8.02 gigawatts, respectively. Among them, the number of new wind power installations during the period increased by only 0.2% over the same period last year.

We expect 25 gigawatts of additional wind power to be installed domestically in 2019. Domestic investment in power projects in the first five months of 2019 was RMB 768 billion (up 5.9% year on year), while investment in power grid projects was RMB 115.7 billion (down 18.2% year on year). It is worth noting that investment in hydropower and wind power increased by 33.8% and 55.0%, respectively, during the period. After adding 21 gigawatts of wind power installed in 2018 (up 7.6% year over year), we expect the number of new domestic wind power installations to reach 25 gigawatts in 2019.

We keep our current earnings forecast unchanged. Assuming low product prices and high steel prices, we believe the company's profitability will remain low. Our current earnings forecast for 2019 to 2021 is RMB 0.282, RMB 0.251, and RMB 0.311.

We upgraded our investment rating to “neutral” but lowered our target price slightly to HK$4.80. We have upgraded our rating of the company mainly because the stock price has fallen to our earlier target price, but we remain cautious about the company's prospects. Our new target price of HK$4.80 is equivalent to 15.0 times the 2019 price-earnings ratio or 0.6 times the 2019 net price-earnings ratio.