Datang Renewable Earnings: Results Largely in Line but Slow Subsidy Collection Is a Risk

We cut our fair value estimate for no-moat Datang Renewable, or DR, to HKD 2.94 from HKD 3.38 to factor in the depreciation of the Chinese yuan and higher tax rates. We also increase our midcycle accounts receivable days to 210 from 180, given the slow subsidy collection. We think the shares are undervalued, with 2023 price/earnings of around 5 times and a price/book ratio of 0.5 times based on the Aug. 29 closing price. We expect net income to grow at a five-year compound annual rate of 10.7% during 2022-27, mainly attributable to rising installed capacity.