Datang Renewable's ("DTR", or the "Company") 1-3Q21 profit attributable to owners of the parent increased 53.1% YoY to RMB1,342 mn. The Company's 1-3Q21 revenue was up 28.5% YoY to RMB8,450 mn, mainly driven by capacity growth and the YoY improvement in wind resources. The Company's estimated wind utilisation hours for 1-3Q21 rose 7.6% YoY to 1,613 hours. Total operating expenses for 1-3Q21 was up 20.1% YoY, which was 1.4 pts less than that of the first half; gross margin saw a continued increase of 3.6 pts YoY to 48.0%. The Company recorded asset and credit impairment totaling RMB7.14 mn in 3Q21, while the accumulated impairment provisions were basically the same compared to that of 1H21. Finance expense dropped 2.7% YoY from the joint effect of lower average borrowing rate and less foreign exchange losses. Income tax expense was up by 32.4% YoY but the increase was 12.1 pts lower than that in profit before tax, contributed by the tax benefit from newly installed capacity. The Company's net profit margin for 1-3Q21 rose 2.6 pts YoY to 15.9%.
Investment suggestion: DTR's 1-3Q21 results were in line with our expectation; net profit to owners of the parent represented 65.4% of our current full-year estimate; 3Q21 net loss narrowed 39.8% YoY to RMB 69.29 mn. The Company's revenue maintained steady growth boosted by new capacity, in the meantime the increase in major operating expenses was within the normal range. The Company did not accrue notable asset impairment in the 3rd quarter, and we expect no further significant impairment provisions for the rest of 2021. Average balance of interest-bearing liabilities may continue to trend up, yet the Company's full-year net finance cost is expected to be basically flat YoY given relatively low average borrowing rate. According to the overall performance of DTR's 1-3Q21 results and profitability margins, we expect to see around 70.0% YoY increase in the Company's 2021 full-year net profit to owners of the parent. As the Company's 3Q21 results were in line with expectation, we maintain "Accumulate" rating for DTR; our current TP is HK$3.75, which represents 14.7x/ 13.3x/ 11.3x 2021-2023 estimated PER. We may slightly adjust our 2021 revenue and operating expenses forecasts and revise up TP accordingly in the next Company Report.