Citi Research cut its target price for Huadian Power International (01071) to HK$3.6 from HK$4.1 and maintained its "buy" rating.
The research house forecast Huadian to make Rmb900m net profit in PRC GAAP in 3Q, up 3.4% QoQ and up 67% YoY, for unit coal cost reduction.
Citi cut its Huadian net profits forecast by 5% for 2019 for lower coal-fired plant utilization and trimmed its 2020-21 14% and 26%, respectively, mainly for lower tariffs due to cancellation of benchmark coal-fired tariffs on 1 January 2020.
Citi assumed Huadian's annual ROE to be 5-7% pa, slightly above its debt cost (4.3% in first 9 months of 2019) ahead amid market-based tariffs and coal costs from next year.
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