China Longyuan Power: A Beacon of Operational Excellence in the Green Energy Transition

The renewable energy sector is not just a trend—it is an inevitability. Among the companies leading this global shift, China Longyuan Power Group (HK:0916) stands out as a strategic pioneer. A recent RMB89 million performance compensation payout from CHN Energy Tianjin Power Co., Ltd. has crystallized the company's operational reliability, positioning it to capitalize on China's aggressive carbon-neutral targets. This article dissects how this milestone validates Longyuan's leadership in wind power and why it presents a rare value proposition in the green energy boom.

Validation of Operational Excellence: The RMB89 Million Milestone

The RMB89.105 million performance compensation received in 2024 from CHN Energy is no trivial reward. It is a vote of confidence from a state-owned energy giant, signaling Longyuan's ability to consistently meet or exceed stringent performance targets. While the specifics of the criteria remain undisclosed, the payout's timing—amid a year where renewable output surged—hints at its alignment with key metrics:

• Wind Power Dominance: Longyuan's core strength lies in its 26.8 GW wind power capacity, accounting for over 60% of China's total installed wind capacity. The compensation likely rewarded operational efficiency gains, such as reduced downtime or increased energy yield per turbine.
• Grid Reliability: In a sector where grid integration is a major hurdle, Longyuan's performance could reflect its ability to deliver stable power output, critical for grid operators like CHN Energy.

This payout is more than a financial gain; it is a strategic endorsement of Longyuan's role as a trusted partner in China's energy transition.

Renewable Dominance and China's Carbon-Neutral Ambition

The performance compensation arrives as Longyuan's renewable output hits historic highs. In April 2025, its total power generation rose 4.85% year-on-year, with renewables excluding coal spiking 17.35%. The surge is driven by:
- Solar Power Surge: Photovoltaic (PV) generation jumped 76.55%, fueled by aggressive capacity expansion. China's solar capacity now totals 333 GW, with Longyuan playing a pivotal role in this growth.
- Wind Power Consistency: Wind output rose 10.52%, underscoring the company's expertise in optimizing its existing fleet.

These metrics align with China's 2060 carbon neutrality goals, where renewables must supply 26% of electricity by 2030. Longyuan is not just keeping pace—it is accelerating. By 2025, it aims to reduce coal's share of generation to below 30%, a decade ahead of national targets.

Financial Fortitude: Low-Cost Funding and Strong Credit

The company's recent RMB2.0 billion green bond issuance at a 1.78% coupon highlights its financial resilience. This ultra-low rate—far below China's 2.18% 10-year government bond yield—reflects its A- (S&P) and A3 (Moody's) credit ratings, among the highest in the sector. Proceeds will fund:
- Debt refinancing to reduce interest costs.
- Renewable projects, including solar and wind farms.

This capital access is a strategic moat, enabling Longyuan to scale without diluting equity. With USD280 million in fresh liquidity, it can outpace rivals in capacity expansion—a critical edge as China races toward 500 GW of solar by 2030.

Technical and Analyst Backing: A Bullish Confluence

The technical picture paints a compelling case:
- Buy Rating: Analysts at CICC and HSBC have reaffirmed a “Buy” rating, citing Longyuan's low valuation multiples and strong cash flow.
- Price Target: The HK$7.10 price target implies 18% upside from current levels.
- Valuation Discount: Trading at 4.2x EV/EBITDA, Longyuan is undervalued relative to its growth trajectory and peers like NextEra Energy (6.8x EV/EBITDA).

Meanwhile, Ember's April 2025 report underscores the industry's momentum: solar and wind now supply 26% of China's electricity, a record high. This structural shift is irreversible—and Longyuan is its prime beneficiary.

Risks and Mitigants

While Longyuan's path is clear, risks persist:
1. Coal Phase-Out Uncertainty: Lingering coal assets could face stranded asset risks if China accelerates its phase-out.
2. Input Cost Pressures: Rising steel and copper prices threaten wind project margins.

Mitigants:
- The company's green bond funds provide a buffer for cost inflation.
- Its focus on solar—a faster-growing segment with declining technology costs—reduces reliance on wind alone.

Conclusion: A Strategic Bet on China's Green Future

China Longyuan Power's RMB89 million performance compensation is not just a reward—it is a strategic validation of its operational excellence in a sector where reliability is paramount. With 17.35% renewable growth, A- credit ratings, and a HK$7.10 price target, this stock offers a rare blend of safety and upside.

As China's energy mix tilts decisively toward renewables, Longyuan stands at the epicenter of this transformation. Investors who act now gain exposure to a $940 billion clean energy market—and a company poised to dominate it.

The window to buy in at 4.2x EV/EBITDA is narrowing. For those seeking a leveraged play on the carbon-neutral economy, China Longyuan Power is not just an investment—it is a stake in the future.

Act now. The green energy revolution isn't waiting.