China renewables IPO plugs into upsides of a glut

China Resources Power Holdings Co

16/06/2026 13:00

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own
By Hudson Lockett

    HONG KONG, June 16 (Reuters Breakingviews) - Oversupply is usually only a problem for the seller. Buyers, on the other hand, get a chance to score goods on the cheap. In China that means the massive glut of solar panels is music to the ears of power producers. The chronic oversupply helps explain why largely coal-fuelled China Resources Power 0836.HK is listing its renewable energy business. But it’s not the only reason.
The sale of more than 2 billion shares in China Resources New Energy will raise about 24.5 billion yuan ($3.6 billion) and set a new fundraising record for the Shenzhen Stock Exchange, per a prospectus filed on Thursday. That would give the wind and solar energy power generator a market capitalisation of $22 billion, valuing it at 24 times last year's earnings. That's better than the 15 times multiple Huadian New Energy 600930.SS went public at last year, but below the 37 times its rival now commands after its stock rose more than 80%.
Granted, CRNE is raising about $1 billion more than Huadian, but arguably is doing so on the cheap. Its net profit in the three months to the end of March may have fallen, at 31%, more from the same period last year than Huadian's 24%. But its net margin of almost 28% bested its peer's 21%.
Both can take advantage of the dire market conditions suffered by China's top-five solar-panel manufacturers, which include Longi Green Energy Technology 601012.SS and Jinko Solar 688223.SS. They lost a combined 7 billion yuan after tax in the first quarter, per Nikkei Asia, as the industry continued to grapple with oversupply that has sent prices into a nosedive. But this means proceeds from CRNE’s listing, all of which have been earmarked for planned wind and solar projects, will go that much further. Moreover, a nationwide shift away from coal is set to accelerate, as is the overhaul of China’s outdated grid — both of which support overall demand and more widespread utilisation of renewable power.
Finally, global oil shortages caused by war in the Middle East this year have further vindicated Beijing’s drive for green, self-sufficient energy production. It all adds up to a solid case for CRNE’s IPO, and probably more like it.
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CONTEXT NEWS
China Resources New Energy, the renewable energy unit of China Resources Power, plans to raise about 24.5 billion yuan ($3.6 billion) from an initial public offering in Shenzhen, according to a prospectus filed with the city's exchange on June 11.
Proceeds from the June 22 offering, the city’s largest on record, will contribute to total investments of 40.4 billion yuan in planned wind and solar projects. China Resources Power will retain a stake of about 84% in the renewables business prior to exercise of an overallotment option.
First quarter net profit at China Resources New Energy fell 31% from a year ago to 1.6 billion yuan due to adverse weather, lower subsidies for some plants and other factors, according to its prospectus.

(Editing by Antony Currie; Production by Aditya Srivastav)
((For previous columns by the author, Reuters customers can click on LOCKETT/ hudson.lockett@thomsonreuters.com))