The performance was lower than expected and profits fell significantly. Tailwind income in the first half of the year was 3.5 billion yuan, up 19% from the same period last year, pre-tax profit was 179 million yuan, and net profit was 172 million yuan, down 66% from the same period last year, 28% lower than our expectations. The company said the decline in profits was mainly due to a drop in the average selling price of solar energy by about 20%, with significant increases in sales, administrative expenses and financial costs.

The visibility of the company's future strategy is low. The president of Shunfeng publicly announced in June that the company plans to transform from a capital-intensive new energy company into a light-asset clean energy service provider. On July 16, 2015, the company terminated the acquisition of eight 723.5MW wind power projects from Shanghai Chengrui. In addition to the possibility of privatizing the company in the future, the future disposal of downwind solar power plant assets will also be in suspense. The company will pay more attention to the strategic development of low-carbon EMC projects in the future. By the end of June, the designed annual installed capacity of the downwind solar power station is expected to be 2267MW, of which 1939 have already started construction.

Fundamental adjustment. Based on the uncertainty of the company's future strategy and the latest deployment, we remove the previously included profit forecasts for wind farms and reduce the additional installation of solar plants from 2016. In the first half of 15 years, the sales volume of components was 548.7MW. We updated our forecast to delay the manufacturing recovery after the acquisition of Suntech in Wuxi, and lowered the annual average selling price according to the latest data. In addition, in view of the uncertainty of the uncompleted EPC project, we downgrade the 15-year 350MW project completion forecast to 100MW. The company recently acquired the manufacturer of Suniva solar cells and modules. We are still optimistic about the development of the company's EMC business, the application of ground source heat pump technology in cooperation with Nobao to boiler equipment for heating in the northern region, as well as the future cooperation and potential listing plans of LED integration in Crystal Optoelectronics and Philips Lumileds, but as these strategic deployments have been recently completed and data disclosure information is limited, it is difficult for us to quantify and evaluate its impact on the overall value of the company.

Downgraded to neutral. We lowered the current net profit in 2015 from 1.55 billion yuan to 1.26 billion yuan (down 4% from the same period last year, including the forecast of 800 million non-recurrent profit in 15 years), from 2.1 billion yuan to 1.1 billion yuan in 16 years (down 13% from the same period last year), and from 2.7 billion yuan to 1.2 billion yuan in 17 years (up 6% from the same period last year). Excluding one-time earnings, 15-year diluted earnings per share remained down from 0.23 yuan to 0.10 (up 79% year-on-year), from 0.31 yuan to 0.17 yuan (up 67% year-on-year) in 16 years, and from 0.39 yuan to 0.18 yuan (up 7% year-on-year) in 17 years. Based on 15 times diluted earnings per share based on 15 years of sustainable earnings, we lowered our target price from HK $8.6 to HK $1.87, equivalent to 15E3.5xPE and 15E0.7xPB, or 16E4.1xPE and 16E0.6xPB. The share price has room to fall by-4.5%, and we have gone from buying to neutral.