The Zhitong Finance App learned that Morgan Stanley released a research report saying that Longyuan Electric Power (00916) has been downgraded since the first half of 2022 due to the Chinese government's investigation of renewable energy subsidies and market concerns about the risk of renewable energy electricity prices. The bank believes that the current valuation of Longyuan H shares is equivalent to 0.75 times in 2024 and 0.69 times market account ratios in 2025. The return on equity of 10% to 11% already reflects these factors, so it has been upgraded to an “increase in holdings” rating, with a target price of HK$9.7.

The forecast is that the wind turbine upgrade may bring better returns. Longyuan will overhaul and upgrade the 350 MW old wind power projects in 2022 and 1.23 gigawatt wind turbines in 2023. All of these projects will be completed in 2025. According to Longyuan, after the upgrade is completed, the installed capacity will increase by 1 to 3 times, and the number of hours used can be increased by 30 to 50%, because these old projects are usually located in regions with the best wind resources. The bank expects the internal rate of return for wind power projects to increase by more than 1.5%.