China Three Gorges Renewables: Initiating Coverage With CNY 4.68 Fair Value; Shares Fairly Valued

We are initiating coverage of China Three Gorges Renewables, or CTGR, with a no-moat rating and a fair value estimate of CNY 4.68. We think the shares are fairly valued, with 2024 price/earnings of around 15.4 times and a price/book ratio of 1.3 times, based on the Nov. 21 closing price. In October, the parent company, China Three Gorges, or CTG, plans to increase its stake in CTGR by spending between CNY 300 million and CNY 500 million to purchase shares at prices not exceeding CNY 6 per share. We believe this exercise will continue to support CTGR’s share prices. As of the end of October, CTG has spent about CNY 128 million to acquire CTGR’s shares.