Concord New Energy reported 1H19 revenue of Rmb963.3m （+19.0% YoY） and net profit ofRmb399.2m （+44.8% YoY）。 Given the company’s solid performance, we maintain our diluted EPSforecast of Rmb0.08 in 19E （+33.3% YoY）， revise up our forecast from Rmb0.10 to Rmb0.11 in 20E（+37.5% YoY）， and maintain our forecast of Rmb0.13 in 21E （+18.2% YoY）。 We lift our target price fromHK$0.46 to HK$0.48, representing 5x 19E PE and 0.6x 19E PB. With 24.7% upside, we maintain ourBUY recommendation.
Solid performance. The company reported 1H19 revenue of Rmb963.3m （+19.0% YoY） and net profitof Rmb399.2m （+44.8% YoY）， with power sales of Rmb886.3m （+41.3% YoY）。 As the power plantoperation business, which enjoys a relatively high gross margin, accounted for 92% of total revenue（vs 77.5% in 1H18）， the company’s blended gross margin rose from 57.0% in 1H18 to 64.9% in 1H19.
Its debt-to-asset ratio decreased from 69.9% in end-2018 to 68.7% in end-June 2019. Meanwhile, itsweighted average financing cost decreased from 5.53% in 2018 to 5.41% in 1H19, and financialexpenses increased 41.6% to Rmb198.7m, on the back of growing Capex, due to new capacity. Tradereceivables grew from Rmb714.7m in 2018 to Rmb831.1m in 1H19, mainly due to governmentsubsidy delays, while management believes some of the subsidies may be received in 2H19. Thecompany declared no dividend for 1H19.
Robust power generation. The company reported an attributable power generation of 2.4TWh in1H19 （+29.0% YoY）， with 2.1TWh from wind segments （+30.8% YoY） and 0.3TWh from solar segments（+16.2% YoY）。 The growth is mainly attributable to the expanding capacity, as well as improvedutilisation hours and curtailment. According to management, the company plans to put 500MW ofwind capacity into operation in 2019. For the wind segment, utilisation hours averaged 1,189 hours（vs 1,190 hours in 1H18）， due to weak wind resources in southern regions, with a curtailment rate of3.9%, lower than the national average （4.7%）。 For the solar segment, utilisation hours averaged 813hours （vs 710 hours in 1H18）， while the curtailment rate decreased from 15.0% in 1H18 to 7.0% in1H19 thanks to an improved situation in Tibet and northern regions. The firm now focuses on highlyprofitable wind and solar power projects in northern regions. Given that resources in northernregions are abundant and power curtailment mitigated, and that the average feed-in tariffs of windpower remained relatively high （Rmb0.55/kWh in 1H19）， we forecast stronger power generationperformance in 2H19.
Maintain BUY. We maintain our diluted EPS forecast of Rmb0.08 in 19E （+33.3% YoY）， revise up ourforecast from Rmb0.10 to Rmb0.11 in 20E （+37.5% YoY）， and maintain our forecast of Rmb0.13 in 21E（+18.2% YoY）。 We lift our target price from HK$0.46 to HK$0.48, representing 5x 19E PE and 0.6x 19EPB. With 24.7% upside, we maintain our BUY recommendation.