China Three Gorges Renewables Earnings: Lower Tariffs and Weak Wind Output; Shares Are Overvalued

China Three Gorges Renewables’ 11% drop in first-half net profit to CNY 4.0 billion was disappointing. While total power output grew 29% year on year, this was lower than capacity growth of 46%. We believe this is due to poor wind resources (which saw wind output only growing 12%), higher curtailment rates, and a drop in average tariff because of an increasing number of grid parity projects and share of power trading volume. We have witnessed a similar trend in results from our other renewable peers. Consequently, we cut our 2024-26 net profit forecasts by 11%-13% to factor in the weak results.