Lower wind energy output looms for China Longyuan Power

Analysts assume a lower utilisation rate of 21.8-23.9% and not 22.2-25.4% as previously forecast.

CIMB noted:

Longyuan announced its power generation data for September. Wind power output rose 9.0% yoy to 1.14bn kWh, taking YTD output to 11.8bn kWh, up 23.2% yoy. Coal power generation slipped 1.8% yoy to 0.91bn kWh during the month while output of other renewable power surged 215.8% yoy to 0.45bn kWh.

We think that the low yoy growth of wind power output reflects last year’s high base and low wind intensity. Lower generation from Heilongjiang, Jilin and Shandong indicates that the wind restriction issue in NE China has yet to be resolved, reducing Longyuan’s utilisation to 17% from 21% a year ago.

We lower our wind power output forecast for FY12-14 by 6%as we assume a lower utilisation rate of 21.8-23.9% (vs. previous forecast of 22.2-25.4%). This results in FY12-14 EPS cuts of8.7%-9.9%.