China Longyuan Power's 3Q profit crashed massively by 67% to CNY159m

The wind power segment performed poorly.

China Longyuan Power announced its 3Q14 results after market close on 28 October 2014, with 3Q earnings dropping 67.3% y-y to CNY159mn, lower than Nomura's estimate of CNY243mn and market expectations.

According to a research note from Nomura, the lower-than-expected 3Q14 results were largely due to the weaker-than-expected wind power segment performance.

However, Nomura noted that despite the lower-than-expected 3Q14 results due to the weak wind speed

YTD, it maintains its positive stance on the company given a potential wind utilization recovery and an ambitious capacity addition plan in 2015.

Here's more from Nomura:

The magnitude of on-grid tariff cut should be less than that in previous draft plan: Management implied that the on-grid tariff cut, as the market expected, is likely to apply on projects to be commenced after 30 June 2015, but with the actual magnitude of the cut to be less than the previous drafted plan of CNY0.02-0.04/kWh.

2015 capacity addition to exceed 2GW with the majority to be commissioned on or before 30 June 2015: To avoid the on-grid tariff cut, Longyuan aims to install 2GW onshore wind projects before 30 June 2015, with focused regions in Jiangsu, Ningxia, Guizhou, and Anhui provinces.

As well, the company also aims to launch further 200-300MW offshore projects in 2H15 to achieve the three-year plan of 1GW offshore capacity. Overall, the management guided for an IRR of >15% for new projects.

Cost savings to be persistently executed going forward: Management restated its strong dedication to improve operating efficiency by better cost controls, especially the administration and R&M expenses.