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On Friday, HSBC analyst Daniel Yang upgraded China Resources Power Holdings stock, listed on the Hong Kong Stock Exchange under the ticker 836:HK and over-the-counter as CRPJY, from Hold to Buy, setting a new price target of HK$22.00, up from the previous HK$19.10. The revision reflects a more favorable outlook for the company’s renewable energy segment, which has been revaluated in line with A-share market peers. According to InvestingPro data, the company maintains a "GREAT" overall financial health score of 3.02 out of 5, with particularly strong profitability metrics.
Yang’s decision to upgrade the stock comes despite a reduction in net profit forecasts for the years 2025 and 2026 by 2-14%, as well as the introduction of new estimates for 2027. The sum-of-the-parts (SOTP) based target price increase is attributed to the updated valuation of the renewables segment. The new target price suggests approximately a 16% upside potential from the current level. Trading at a P/E ratio of 6.4 and with a market capitalization of $12.55 billion, InvestingPro analysis suggests the stock is currently fairly valued relative to its Fair Value.
The analyst highlighted China Resources Power’s operational expertise and geographic presence in south, central, and east China as key factors that should position the company well amid intensifying competition in wind and solar project development. Yang pointed out that the company’s capabilities in project operation give it a competitive edge in the renewable energy sector. The company has demonstrated solid performance with a gross profit margin of 47.5% and revenue of $13.6 billion in the last twelve months.
Two potential catalysts for the stock were identified by Yang. The first is an anticipated further decline in coal prices in the second quarter of 2025, which could improve the company’s profitability. The second is progress in the potential spin-off of the company’s assets on the A-share market, which could unlock additional value for shareholders.
China Resources Power Holdings is expected to benefit from these developments, as the company continues to navigate the competitive landscape of the renewable energy industry. The upgrade by HSBC reflects confidence in the company’s strategy and future prospects.
In other recent news, China Resources Power Holdings Co Ltd has been downgraded by UBS analysts from a Buy to a Neutral rating. The firm’s analysts have significantly reduced the price target for the company to HK$18.00 from HK$31.00, citing expectations of a challenging future for the company’s fundamentals. UBS anticipates a 7% blended tariff cut in 2025, which is one of the steepest among Chinese power producers. The analysts also foresee a decrease in coal power utilization hours due to a slower growth outlook for power demand, adjusting their forecast from 6% to 5% over the period from 2025 to 2030. This revised outlook has led UBS to cut earnings estimates for China Resources Power for the years 2025 to 2027 by 30-35%, placing them 18-26% below the consensus. The report indicates that these developments have already been partially reflected in the market, as evidenced by the company’s 11% decline in stock value year-to-date. UBS has expressed a preference for Longyuan over China Resources Power in the Chinese independent power producer sector. The firm’s neutral stance highlights caution amid anticipated industry headwinds.
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