CGN Power (SEHK:1816) Valuation in Focus After Earnings Reveal Lower Revenue and Profit

CGN Power (SEHK:1816) just reported its latest earnings, with both revenue and net income down for the nine months through September 2025 compared to last year. This update gave investors plenty to digest.

See our latest analysis for CGN Power.

Despite the dip in earnings, CGN Power’s shares have shown solid momentum. After the news, the share price notched up an 18.32% gain year-to-date and a 1-year total shareholder return of 18.42%. The longer-term story is even stronger, with total shareholder returns of over 130% over five years, indicating that investors continue to see long-term value despite recent challenges.

If this steady run has you thinking about other opportunities, it could be the perfect moment to broaden your outlook and discover fast growing stocks with high insider ownership

With earnings down but the stock’s long-term run intact, investors are left to consider whether CGN Power is currently undervalued, or if the market is already factoring in any future growth potential.

Price-to-Earnings of 15.9x: Is it justified?

CGN Power trades at a Price-to-Earnings (P/E) ratio of 15.9x, which is below the Asian Renewable Energy industry average of 17.8x but above the peer group average of 8.5x. At the last close of HK$3.23, this pricing suggests the stock is relatively well-valued compared with the broader sector, though more expensive than similar peers.

The P/E ratio measures how much investors are willing to pay for each dollar of CGN Power's earnings. In capital-intensive industries like utilities, this multiple is a key gauge of market expectations for future profit sustainability and growth. Higher multiples can reflect optimism about growth prospects or balance-sheet strength.

While the company's P/E sits attractively below the sector average, it is significantly higher than the calculated fair P/E ratio of 12.3x. This could imply some premium is being priced in by the market, potentially for CGN Power's earnings resilience or unique market position. It also suggests there may be limited upside if growth does not accelerate meaningfully.

The Asian industry commands a P/E of 17.8x, making CGN Power look affordable in comparison. However, versus a peer group at 8.5x and its own fair ratio at 12.3x, the valuation appears stretched. If the market shifts toward the lower fair multiple, there could be pressure on the price.

Explore the SWS fair ratio for CGN Power

Result: Price-to-Earnings of 15.9x (ABOUT RIGHT)

However, softer revenue growth or weaker-than-expected net income could quickly reverse recent momentum. This makes valuation risks worth watching at current levels.

Find out about the key risks to this CGN Power narrative.

Another View: Is the SWS DCF Model Telling a Different Story?

While the Price-to-Earnings approach signals CGN Power is fairly valued to slightly expensive, our DCF model paints a more optimistic picture. Based on projected cash flows, the SWS DCF model suggests the stock is actually trading about 32% below its fair value right now. That is a sizable difference. Which method is more convincing for today’s buyers?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out CGN Power for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 848 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own CGN Power Narrative

If you think there is more to the story or want to do your own digging, it is easy to build your own take in just a few minutes. Do it your way

A great starting point for your CGN Power research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.