J.P. Morgan maintained its target price for Shanghai Electric (02727) unchanged at HK$3 but upgraded its rating to "overweight" from "neutral".
The research house expects profit from new energy equipment (wind and nuclear) to exceed that of fossil-fueled power generators from 2H. This should stop the de-rating of the stock from 20x forward P/E to 10x over the recent three years, as JPM believes most investors have viewed the stock as a fossil-fuel proxy, and kick off a re-rating as the stock is rebranded as a new energy play when new energy equipment drives profit back to growth from FY2020.
JPM raised its EPS forecast by 5% for FY2020, driven by higher-than-expected revenue growth from new energy equipment.
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