Operating results in 1H2021 slightly beat our expectation. Net profit in 1H2021 jumped 41.3% YoY to RMB1,348 mn, which was approximately 54% of our full-year earnings forecast for 2021. In 1H2021, high efficiency clean energy equipment was the only segment to see revenue decline with its sales down 26.8% YoY to RMB6,190 mn, while the other four business segments experienced revenue growth. Renewable energy equipment sales surged 146% YoY to RMB7,871 mn and accounted for 34.6% of total revenue in 1H2021. Consolidated gross margin in 1H2021 was down YoY by 1.4 ppt to 19.7%. New orders in 1H2021 went up YoY by 32.9% to RMB34.392 bn.

A hydro power equipment market in the size of approximately RMB225 bn during the 14th Five-Year Plan period will soon be unlocked. The NEA of China issued a letter on the solicitation of comments regarding the "Pumped Storage Project Mid- and Long-Term Development Plan (2021-2035)" on August 6th 2021, indicating that over the 15-year period from 2021 to 2035, an aggregate of 300 GW of pumped storage hydro projects will commence construction. Total investment on pumped storage hydro projects from 2021 to 2035 will hit RMB1.8 trn with RMB900 bn to be spent from 2021 to 2025.

We maintain the investment rating of "Buy" and raise our TP to HK$13.00. Our revised EPS estimates from 2021 to 2023 are RMB0.884, RMB0.953 and RMB1.075, respectively. Our new TP corresponds to 12.3x/ 11.4x/ 10.0x 2021 to 2023 PER or 1.0x/ 1.0x/ 0.9x 2021 to 2023 PBR.