HSBC Global Research lowered its target price for China Resources Power (CRP)(00836) to HK$12.3 from HK$13.5 and downgraded its rating to "hold" from "buy" after it announced disappointing dividends and results for 2018 in late March.
The research house said CRP's valuation premium over peers has narrowed to an average of 12% (more than 30% in the past five years) given CRP's more superior ROE. Thus, it sees limited downside to CRP at the current level. But in the meantime, HSBC believes it takes time to restore investor confidence after the unexpected dividend cut.
HSBC raised its earnings forecasts for CRP by 2-4% for 2019-21.
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