Datang Renewable Earnings: Weak Average Tariff Trend in Line With Peers

We cut our fair value estimate for no-moat Datang Renewable to HKD 1.90 per share from HKD 2 after factoring in a lower average tariff, which reduced our 2024-26 earnings estimates by an average of 2%. Based on a 2024 price/book ratio of 0.3 times and price/earnings of around 4.3 times, DR looks inexpensive. However, its high debt remains a concern, and we think DR is fairly valued. Our top pick in renewable energy is China Longyuan, given its leadership position and strong execution record. With slow subsidy settlements and concerns about declining tariffs, we believe renewable energy stocks' price performance could remain lackluster in the near term.