Citi Lowers CHINA LONGYUAN Rating to Neutral Following Disappointing Interim Earnings, Suggests GOLDWIND as an Alternative
Earnings Miss: CHINA LONGYUAN's interim earnings fell short of expectations due to increased market competition and reduced electricity tariffs.
Forecast Adjustments: Citi has lowered its revenue and net profit forecasts for CHINA LONGYUAN for 2025-27 by up to 13.8%, with current net profit estimates 14-18% below market expectations.
Target Price Cut: The target price for CHINA LONGYUAN has been reduced from HKD7.1 to HKD7, and its rating has been downgraded from Buy to Neutral.
Shift in Preference: Citi now favors GOLDWIND, which is rated as Buy with a target price of HKD9, anticipating benefits from rising wind turbine prices.
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HSBC Research: Chinese Power Utilities Entering 'Stagnation Phase'
Challenges in China's Power Industry: HSBC Research indicates that China's power industry will experience weakened growth momentum in the first year of the 15th Five-Year Plan due to declining electricity prices, a slowdown in new installations, and a stabilizing policy environment.
Downgrades and Ratings: HSBC has downgraded HUANENG POWER from Hold to Underweight and CHINA RES POWER from Buy to Hold, reflecting concerns over their earnings forecasts.
Optimism for CHINA LONGYUAN: The report expresses optimism for CHINA LONGYUAN, anticipating that its earnings growth will lead the industry, driven by strong performance in wind resources.
Attractive Dividend Yields: CHINA POWER is projected to have a 5.8% dividend yield in FY26, while CHINA YANGTZE POWER is expected to yield about 3.7%, making them attractive options among their peers.
HSI Closes 76 Points Lower; HANG SENG BANK Soars Approximately 26%; SMIC and HUA HONG SEMI Decline
Hong Kong Stock Market Performance: The HSI opened higher but closed down 76 points at 26,752, while the HSCEI and HSTECH showed mixed results. Total market turnover was HKD386.818 billion.
HSBC and Hang Seng Bank Developments: HSBC proposed to privatize Hang Seng Bank at a 30.3% premium, causing HSBC's stock to drop nearly 6% while Hang Seng Bank surged 25.9%. Other local banks also experienced gains.
AI and Chip Sector Fluctuations: AI-related stocks were volatile, with major chip makers like SMIC and Hua Hong Semi declining, while companies like ASMPT and Lenovo Group saw significant gains.
Power and Clean Energy Stocks Rise: Power utilities and clean energy stocks performed well, with notable increases in CGN Power, China Power, and Goldwind, reflecting a positive trend in these sectors.
JPM Increases CHINA LONGYUAN's Target Price to HKD8.8, Maintains Overweight Rating
Earnings Forecast Update: JPMorgan has raised its FY25-27 earnings forecasts for CHINA LONGYUAN, reflecting positive trends in wind power generation and operational performance in 2Q25.
Long-term Outlook Improvement: The new 2035 wind and solar capacity target of 3,600 GW enhances CHINA LONGYUAN's long-term prospects, while potential improvements in electricity price regulation and power curtailment may attract more capital investment.
HSBC Research Assigns Buy Ratings to CHINA LONGYUAN, EB ENVIRONMENT, GCL TECH, and XINYI SOLAR; Progress in RE Subsidy Settlement
Settlement of Renewable Energy Subsidies: The Ministry of Finance has made progress in settling overdue renewable energy subsidies, with utilities like CEB GREENTECH and CHINA LONGYUAN receiving significant payments in July and August.
Investment Ratings and Supply Chain Preferences: HSBC Global Research favors GCL TECH and XINYI SOLAR due to adjustments in solar equipment overcapacity, while providing updated investment ratings and target prices for several power utilities.
Citi's Ratings and Target Prices for Power Utilities (Table)
Stock Performance Overview: Various Chinese energy stocks show mixed performance, with CHINA RES POWER and CGN POWER experiencing declines, while HUADIAN POWER and CHINA SUNTIEN report gains.
Short Selling Activity: Significant short selling activity is noted across several stocks, with CGN POWER having the highest short selling ratio at 34.136%, indicating bearish sentiment among investors.
BofAS: Interim Results of CN Power Stocks Meet Expectations; HUANENG POWER and EB ENVIRONMENT Rated as Buy; HUADIAN POWER Downgraded to Neutral
Chinese Power Stocks Performance: BofA Securities reported that Chinese power stocks' 1H25 results met expectations, showing strong earnings in thermal power and environmental sectors, while gas, wind, and solar producers underperformed.
Market Outlook and Ratings: BofA shifted to a neutral stance on thermal power due to potential downward pressure on electricity prices, downgrading several companies while maintaining a Buy rating for EB ENVIRONMENT, which exceeded profit expectations.
HSBC Research: Chinese Power Utilities Entering 'Stagnation Phase'
Challenges in China's Power Industry: HSBC Research indicates that China's power industry will experience weakened growth momentum in the first year of the 15th Five-Year Plan due to declining electricity prices, a slowdown in new installations, and a stabilizing policy environment.
Downgrades and Ratings: HSBC has downgraded HUANENG POWER from Hold to Underweight and CHINA RES POWER from Buy to Hold, reflecting concerns over their earnings forecasts.
Optimism for CHINA LONGYUAN: The report expresses optimism for CHINA LONGYUAN, anticipating that its earnings growth will lead the industry, driven by strong performance in wind resources.
Attractive Dividend Yields: CHINA POWER is projected to have a 5.8% dividend yield in FY26, while CHINA YANGTZE POWER is expected to yield about 3.7%, making them attractive options among their peers.
HSI Closes 76 Points Lower; HANG SENG BANK Soars Approximately 26%; SMIC and HUA HONG SEMI Decline
Hong Kong Stock Market Performance: The HSI opened higher but closed down 76 points at 26,752, while the HSCEI and HSTECH showed mixed results. Total market turnover was HKD386.818 billion.
HSBC and Hang Seng Bank Developments: HSBC proposed to privatize Hang Seng Bank at a 30.3% premium, causing HSBC's stock to drop nearly 6% while Hang Seng Bank surged 25.9%. Other local banks also experienced gains.
AI and Chip Sector Fluctuations: AI-related stocks were volatile, with major chip makers like SMIC and Hua Hong Semi declining, while companies like ASMPT and Lenovo Group saw significant gains.
Power and Clean Energy Stocks Rise: Power utilities and clean energy stocks performed well, with notable increases in CGN Power, China Power, and Goldwind, reflecting a positive trend in these sectors.
JPM Increases CHINA LONGYUAN's Target Price to HKD8.8, Maintains Overweight Rating
Earnings Forecast Update: JPMorgan has raised its FY25-27 earnings forecasts for CHINA LONGYUAN, reflecting positive trends in wind power generation and operational performance in 2Q25.
Long-term Outlook Improvement: The new 2035 wind and solar capacity target of 3,600 GW enhances CHINA LONGYUAN's long-term prospects, while potential improvements in electricity price regulation and power curtailment may attract more capital investment.
HSBC Research Assigns Buy Ratings to CHINA LONGYUAN, EB ENVIRONMENT, GCL TECH, and XINYI SOLAR; Progress in RE Subsidy Settlement
Settlement of Renewable Energy Subsidies: The Ministry of Finance has made progress in settling overdue renewable energy subsidies, with utilities like CEB GREENTECH and CHINA LONGYUAN receiving significant payments in July and August.
Investment Ratings and Supply Chain Preferences: HSBC Global Research favors GCL TECH and XINYI SOLAR due to adjustments in solar equipment overcapacity, while providing updated investment ratings and target prices for several power utilities.
Citi's Ratings and Target Prices for Power Utilities (Table)
Stock Performance Overview: Various Chinese energy stocks show mixed performance, with CHINA RES POWER and CGN POWER experiencing declines, while HUADIAN POWER and CHINA SUNTIEN report gains.
Short Selling Activity: Significant short selling activity is noted across several stocks, with CGN POWER having the highest short selling ratio at 34.136%, indicating bearish sentiment among investors.
BofAS: Interim Results of CN Power Stocks Meet Expectations; HUANENG POWER and EB ENVIRONMENT Rated as Buy; HUADIAN POWER Downgraded to Neutral
Chinese Power Stocks Performance: BofA Securities reported that Chinese power stocks' 1H25 results met expectations, showing strong earnings in thermal power and environmental sectors, while gas, wind, and solar producers underperformed.
Market Outlook and Ratings: BofA shifted to a neutral stance on thermal power due to potential downward pressure on electricity prices, downgrading several companies while maintaining a Buy rating for EB ENVIRONMENT, which exceeded profit expectations.
