Zhitong Finance APP learned that Huayuan Securities released a research report stating that it has initiated coverage on Datang Renew (01798) and given a "buy" rating, with a net income attributable to the parent company owner of 2.938 billion yuan, 3.182 billion yuan and 3.505 billion yuan in 2024-2026, respectively. The company will pay a cash dividend of 0.07 yuan per share (tax included) in 2023 with a corresponding dividend rate of 4.0%. At the current point in time, the bearish reality in the green energy sector is present, but the response is relatively sufficient. The company's current valuation is at a historical low, and the stock price is in the deep value range.

Huayuan Securities' main viewpoints are as follows:

Datang Group's new energy flagship platform, a veteran green energy leading operator in China.

The company is the core green energy platform under Datang Group, with the group currently holding 65.61% of the company's equity and promising Datang Renew the right of priority and purchase of the group's domestic new energy business. The company's predecessor was Datang Chifeng Saihanba Wind Power Generation Co., Ltd., one of the earliest power companies engaged in new energy development in China. As of the end of 2023, the company had a controlling installed capacity of 15.42 million kilowatts, including 12.98 million kilowatts of wind power and 2.44 million kilowatts of photovoltaic power. The company's current new energy installed capacity ranks seventh among A+H-listed companies, with wind power assets concentrated in the Three-North area, accounting for more than 80%.

Occupying the old wind farms in the Three-North region, wind resources are extremely high-quality but early units have performance problems.

From the perspective of historical development, the company has focused on cultivating areas with excellent wind resources in the Three-North region early on, and the resource endowment is highlighted in the scarce high-quality wind farms at present. However, in terms of wind turbine efficiency, as a pioneer wind power operator in China, the company's units are mainly concentrated in those commissioned from 2007 to 2011, accounting for about 40% of the company's current wind power capacity. The old units have characteristics such as low wind energy utilization rate, high maintenance costs and high unit fixed costs.

The State Council issued a large-scale equipment renewal plan to replace old with new or greet new machines.

In March 2024, the State Council issued a notice of "Pushing Forward Large-Scale Equipment Renewal and Old-for-New Consumer Goods Action Plan," once again mentioning the improvement of standards for upgrading and retiring wind power generators, photovoltaic equipment and products. In May 2024, China Datang Corporation held a meeting on the promotion of large-scale equipment renewal and transformation and arranged the promotion of large-scale equipment renewal work. The company's wind power installed capacity before 2010 was 4.028 million kilowatts, and since the unit power of wind turbines before 2010 was generally below 1.5MW, but 4MW has now become the mainstream, the policy of "replacing old with new" for wind turbines with a unit power of less than 1.5MW may enable the company to get rid of the shackles of old stock units and achieve a new lease of life in operating efficiency.

Risk warning: risk of historical subsidy impairment, new installed capacity is lower than expected, and new energy market electricity prices are volatile.