Longyuan Power breezes by November with 7.3% increase in wind power generation

Thanks to strong wind speed recovery.

Longyuan announced its November power generation data, with the group’s blended power generation in November up 3.1% y-y to 3,134GWh, narrowing the 11M14 y-y drop in power generation volume to 29,526GWh (-3.4%).

According to a research note from Nomura, the moderate increase of November power generation was mainly attributable to: 1) 7.3% y-y (or 7.9% m-m) wind power generation growth, thanks to the strong wind speed recovery in Heilongjiang, Jiangsu, Xinjiang, Yunnan, etc.

The report also noted though that the increase was partially offset by the weak wind speed in Fujian, Hainan, Gansu and Liaoning; and 2) 6%/17% y-y drop in thermal/other renewable power output, respectively.

Here's more from Nomura:

Likely stock movement: Positive on good wind speed for the 2nd month: The continuous recovery of November wind power generation data was again in line with our expectation of a likely wind speed turnaround in 4Q14.

Overall, we expect investors’ confidence on wind operators could be strengthened by the steady wind output two months in a row, which should lead to a positive reaction for the stock price performances of wind farm operators.

We reiterate our view that: 1) 4Q is generally the strongest quarter in terms of wind speed; 2) there is a low base for wind speed in December 2013; and 3) there is a stronger capacity addition in 4Q14 vs. 2013 – we expect the wind output to continue to bounce back, which would act as a share price catalyst for the wind farm operators, in our view.