Longyuan's wind power capacity additions disappoint analysts

But it expects additional 1.2-1.4GW by the next quarter.

According to Barclays, Longyuan reported 3Q results with headline net income almost breaking even, while the underlying operating profit was in line (up 11% y/y). Headline weakness was driven by forex losses of RMB300mn, according to the company.

"Operationally, power generation was in line with our estimates, but capacity additions disappointed. However, the company maintained its full-year capacity addition guidance of 2.0-2.6GW, implying 1.4GW addition in 4Q15 at mid-point of guidance," Barclays said.

Longyuan also reiterated its guidance of 2GW capacity addition in 2016. Accelerated capacity additions and moderation in forex volatility should help to normalize headline profitability in 4Q15.

Here's more from Barclays:

Net income of RMB12mn was just above break-even levels and significantly below our forecast of RMB395mn. The bulk of the miss could be attributed to the forex loss. Longyuan had RMB7.5bn foreign currency loans outstanding (c10% of total loan book), which was impacted by the difference between the RMB exchange rate of 6.36 and 6.11 against the US$.

Underlying results in line: Operating profit at RMB1.1bn was broadly in line to our estimate. Importantly, OP increased 11% y/y, while the sequential decline of 52% was due to adverse seasonality. However, the y/y growth rate for Longyuan was much lower than the 67% y/y increase reported by Huaneng Renewables for 3Q15, which was supported by continuation of strong capacity additions and power generation.

Wind power generation, at 4.7bn kWh, was up 9% y/y (falling short of Huaneng Renewables 23% y/y growth) and in line to our estimates. Installed wind power capacity, at 14.6GW, was unchanged from 2Q15 levels, but the company expects to add 1.2-1.4GW capacity in 4Q15, which will take the total capacity addition to 2.2-2.4GW for full-year 2015. Higher additions in 2015 are driven by tariff cut deadline effective from January 2016. The company expects capacity additions to normalize to 2GW in 2016.