2016 net profit -23% YoY, missing estimates2016 revenue was US$1.1bn （-7% YoY） and net profit wasUS$79mn, （-23% YoY） or US$0.0185/sh. Stripping out disposalgains （US$18.7mn） and other one-off items, core profit wasUS$65mn （-38% YoY）， disappointing mainly due to its coal-firedsegment, which saw a 54% YoY drop in profit under surging coalprices （+11% YoY） and lower FiT （-10% YoY）。
　　Trends to watch
　　Parentco injection guidance intact. CGNNE maintains itsguidance of having 3~5GW of renewable energy assets injectedfrom its parent company （CGNPC） by 2018; 1.4GW of capacitywas already injected in 2015, it intends to complete theremaining asset injection as soon as possible.
　　Major beneficiary of eased curtailment. CGNNE sufferedfrom severe curtailment problems and thus had low windutilization of 1,409hrs in 2016 （vs. the China average of1,742hrs） mainly due to its large exposure to Gansu （1,144hrs），which accounts for 69%/17% of its attributable wind/totalcapacity. The Jiuquan-Hunan UHV line already commencedoperation in March 2017, which could solve its problems; we thusexpect its curtailment ratio to decrease gradually. Managementguide ~9bn KWh of renewable energy could be transmitted toHunan through this line, which would account for 69% of thetotal curtailed renewable power in Gansu for 2016.
　　Earnings forecast
　　In order to factor in high coal price assumptions and an updatedinjection schedule, we lower our 2017 EPS forecast by32% from US$0.03 to US$0.02.
　　Valuation and recommendation
　　The stock is trading at 8x 2017 P/E. We maintain our BUYrating, but lower our target price by 18.92% to HK$1.50,implying 20.97% upside room from the current price.
　　Risks
　　Worse power demand in China & Korea; delays in asset injection.