Datang Renewable's First Half Reveals Faster Collection of Subsidies; Shares Attractive

We've raised our fair value estimate for no-moat Datang Renewable to HKD 2.74 per share from HKD 2.62 on the back of quicker subsidy collection and better cost management. We think the shares are undervalued, with 2022 price/earnings of around 7 times and price/book ratio of 0.4 times based on the Aug. 31 closing price. We expect adjusted EBITDA to grow at a five-year compound annual rate of 13.9% during 2021-26, mainly attributable to rising installed capacity. The firm still expects to add 2.0 gigawatts of renewable capacity in 2022 (it added 849 megawatts in 2021).