Citi Research maintained its target price for Huaneng Renewables (00958) to HK$3.17 but downgraded its rating to "neutral" from "buy".
The research house said HR's share price has rallied and is now only 7% below its privatization offer price of HK$3.17/share. The risk-reward has become less attractive.
Citi likes the H-share offer, but it is subject to (1) the delisting being approved by at least 75% H shares and with objection from less than 10% H shares; and (2) acceptance by at least 90% H shares. Both are uncertain.
Meanwhile, Citi estimated its 3Q earnings, due end-October, would be uninspiring, given wind farm output was down 6.9% to 3.771m MWh on wind farm utilization decline of 11.4% due to low wind speed.
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