DTR's total power generation in 1Q22 decreased 6.9% YoY. Wind power output in 1Q22 was down 8.9% YoY to 6,691 GWh, mainly due to the deterioration in wind resources. Estimated wind utilisation hours for the quarter dropped 15.2% YoY to 558 hours. Solar power generation for 1Q22 surged 81.5% YoY compared to a relatively low base in 2021.
The Company's 2021 profit attributable to owners of the parent increased 54.3% YoY to RMB1.831 bn, lower than our expectation. The worse-than-expected earnings results were mainly caused by notable increase in R&M and material costs. Meanwhile, the Company recorded further impairment losses in 2H21, coupled with several increases in miscellaneous costs to varying degrees. The Company added 848.5 MW in wind & solar capacity during 2021, among which the increment in solar capacity was notably lower than the management’s previous guidance.
Maintain "Accumulate" rating while cut TP to HK$3.70 for DTR. We currently estimate DTR's 2022/ 2023/ 2024 EPS to be RMB0.174/ RMB0.232/ RMB0.302, respectively. The decrease in the Company's total output is likely to weigh on its 1Q22 results, leading to a moderate YoY decrease in shareholders' profit. That said, we maintain an optimistic outlook on DTR's long-term profitability as the Company may benefit from domestic energy transition and maintain considerable capacity expansion during the 14th Five-Year Plan period. Recently there has been a substantial increase in the 2022 Central Government Budget regarding expenditures from other government-managed funds, which indicated potential acceleration in the collection of subsidy arrears. Given that both DTR’s FY21 results and its capacity addition progress missed our expectation, we cut TP from HK$3.75 to HK$3.70; current TP represents 17.3x/ 13.0x/ 10.0x 2022/ 2023/ 2024 PER.