[ET Net News Agency, 25 March 2020] Daiwa Research lowered its target price for China
Everbright International (CEI)(00257) to HK$4.3 from HK$4.95 but upgraded its rating to
"outperform" from "hold" on valuation.
The research house said the future tariff policy on WTE (waste-to-energy)/biomass is
still uncertain and remains an overhang. Daiwa expects CEI to continue its asset-heavy
model via robust project ramp-up with heavy capex and rising gearing and negative FCF.
Daiwa said CEI's actual capex rose from HKD13.5bn in 2018 to HKD19bn in 2019 and is set
to increase to HKD20bn in 2020. As such, it estimated CEI's net gearing will rise from 91%
at end-2019 to 113-140% over 2020-22.
Daiwa adjusted its 2020-21 EPS forecasts by -9%/+2% to factor in the latest project
schedule. (KL)