China Longyuan reported 3Q26 revenue of RMB6.6bn (-2.21% YoY, -2.58% QoQ) and attributable NP of RMB425mn (-60.87% YoY, -44.78% QoQ). The quarterly earnings decline widened from 2Q26 (-47.7% YoY), reflecting continued YoY declines in wind generation and tariffs, higher D&A as installed capacity expanded, and a sharp drop in other income following the removal of VAT refunds. In 9M26, revenue was RMB21.24bn (-5.19% YoY), attributable NP was RMB2.82bn (-36.83% YoY), and recurring NP was RMB2.82bn (-34.27% YoY). Subsidy collections are translating into a cash flow inflection, while declines in both generation and tariffs narrowed in 3Q26. A substantial pipeline of offshore wind and large-scale renewable energy base projects supports further capacity additions and an earnings recovery. We maintain BUY on both the A- and H-shares.
M&A lifts capacity; 3Q26 wind output decline sharply narrows
China Longyuan added 2.05GW of renewable capacity in 9M26, comprising 0.90GW of wind and 1.15GW of solar. Approximately 1.09GW came from the acquisition of the Guohua (Cangzhou) hydrogen production project, with limited internally developed solar additions. Total generation was 56.25bn kWh (-0.5% YoY), including wind generation of 43.89bn kWh (-5.0% YoY) and solar generation of 12.35bn kWh (+19.3% YoY). Average wind utilization was 1,379 hours (-132 hours YoY), but 3Q26 utilization was 397 hours, down just 12 hours YoY. The decline in wind generation narrowed to 0.5% YoY in 3Q26, while September generation rose by 3.2% YoY, the first positive monthly growth this year. We believe the impact of weak wind conditions is easing. If wind conditions normalize in 4Q26, the drag from generation on earnings could diminish further.
Earnings forecast and valuation
We lower our 2026–2028 attributable NP forecasts to RMB3.48bn/4.56bn/5.59bn (-13.88%/-9.17%/-8.43% vs our previous forecasts; three-year CAGR of 7.3%), implying EPS of RMB0.42/0.54/0.67. The cuts mainly reflect a slower recovery in wind utilization and tariffs, alongside greater employee cost and depreciation and amortization pressure than previously assumed. Our target price of China Longyuan - A arrives at RMB16.20 (previously RMB16.80, based on 35x 2026E P/E), based on 30x 2027E P/E, above the peer average of 28x per Wind consensus. The premium reflects China Longyuan's higher 2026–2028 attributable NP CAGR of 7.3%, versus the peer average of 6.4%. Our H-share target price arrives at HKD6.31 (previously HKD6.66, based on 12x 2026E PE), based on 10x 2027E PE, above the peer average of 8.4x per Wind consensus, reflecting China Longyuan's higher 2026–2028 attributable NP CAGR of 7.3%, versus the peer average of -3.6%.
Risks: larger-than-expected tariff declines, weaker-than-expected wind conditions, higher-than-expected curtailment, slower-than-expected capacity additions, lower-than-expected subsidy collections.