JPMorgan has released a research report stating that the share price of China Longyuan Power Group Corporation Limited (00916) has underperformed the Hang Seng China Enterprises Index by approximately 11% year-to-date. Its current valuation level is only equivalent to a 0.5x forecast price-to-book ratio for the 2027 fiscal year, which represents a 15-year low.

The firm noted that while the company faces pressures from rising wind curtailment rates and market-oriented electricity price reforms, its strategic role within the national energy system is strengthening. The current valuation is deemed highly attractive, prompting JPMorgan to upgrade its investment rating from "Neutral" to "Overweight," while maintaining a target price of HK$7.

The bank anticipates that with the accelerated installation of energy storage systems from 2025 to 2026, sustained growth in grid capital expenditure in 2026, and a slowdown in new energy capacity installation growth in 2026, China Longyuan's wind curtailment rate is expected to improve. The utilization hours for its wind farms are projected to rebound from a low point in 2026.

Regarding electricity prices, the market-oriented pricing policy for wind and solar power will be fully implemented from the first quarter of 2026. After experiencing the impact for a full year, the downward pressure on electricity prices is expected to ease starting from 2027. JPMorgan has adjusted its profit forecasts for China Longyuan for 2025 to 2027, with revisions ranging from a 1% decrease to a 15% increase. Specifically, the adjusted earnings per share for 2027 have been raised by 7.2% from RMB 0.55 to RMB 0.59.