[ET Net News Agency, 26 July 2019] HSBC Global Research expects China's coal IPPs to
report decent 1H earnings growth of 25-90% from end July to August, likely the strongest
results in the China utility space.
The research house thinks this will be driven mainly by a decline in unit fuel cost
throughout the period, the VAT cut in 2Q, and a low earnings comparison base last year,
only partly offset by lower thermal utilisation in the country.
While coal IPPs reported a massive miss in 2018 results in March, the cut to 2019
consensus net profit has been limited (-3% on average). Hence, HSBC believes the potential
for strong 1H results is largely in line with current market expectations.
Overall, USBC is neutral on the sector, as it sees limited downside to the current
valuation of Hong Kong-listed coal IPPs. HSBC's rating and target price for China's coal
IPPs are as follows:
Name Rating Target Price
-------------------------------------------------------
China Power (02380) Buy HK$2.60
Datang Power (00991) Buy HK$2.40 from HK$2.5
CR Power (00836) Hold HK$12.30
Huaneng Power (00902) Hold HK$5.00 from HK$5.1
Huadian Power (01071) Hold HK$3.40
(KL)