Analyst Research Report Snapshot


China Resources Power (836 HK, HK$19.56, N): Maintain Neutral




KGI Greater China


25 Mar 2014





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Core earnings beat; estimates raised Net income up 47.3% YoY to HK$11.0bn in 2013; core earnings above expectation on sales & investment gains and steep financing expense decline In 2014, company guides installation growth of 15.3% but is cautious on coal-fired facility utilization hours; we estimate utilization decline of 1%; 2013 unit fuel costs fell 16.3%; we revise down 2014F unit fuel cost decrease to 5.2%; we cut 2014F & 2015F financing expenses to HK$3.68bn & HK$3.97bn on larger decline of debt ratio & funding costs On deferred power tariff cuts, lower unit fuel costs & financing expenses, we raise 2014F & 2015F net income 13% & 4.5% to HK$11.2bn & HK$13.1bn, for EPS of HK$2.35 & HK$2.73; based on earnings upgrade, we raise 12M target PB from 1.3x to 1.4x & target price from HK$18.5 to HK$21.2 (2014F PE of 9.0x); maintain Neutral As we have revised up 2014F and 2015F earnings, for respective EPS of HK$2.35 and HK$2.73, our revised ROE forecasts are 15.5% and 16%, among the best in the sector. Shares are trading at 2014 PB of 1.3x and PE of 8.3x. Due to our earnings upgrade, we raise 12M target PB from 1.3x to 1.4x and target price from HK$18.5 to HK$21.2, equivalent to 2014F PE of 9.0x. With tariff mark-down pressure in sight, we reiterate our Neutral rating.

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