Bank of America Securities: Raises China Longyuan Power Group Corporation (00916) target price to 5.7 Hong Kong dollars, maintains "underperform" rating.

Bank of America Securities released a research report stating that the sharp increase in wind power tariffs in the fourth quarter of China Longyuan Power Group Corporation (00916) was attributed to the increase in power generation from high tariff regions. The bank doubts whether this is sustainable and believes that this upward trend is inconsistent with industry trends. Given the flat profit prospects for 2025-27, the bank believes that Longyuan's reasonable market accounting rate is at the low end of historical range at 0.6 times, compared to the current 0.65 times. The bank has raised its earnings forecast for 2025-26 by an average of 15%, reflecting higher benchmark electricity prices last year and lower personnel costs from 2024 to 2026. The target price has been raised from 5.2 Hong Kong dollars to 5.7 Hong Kong dollars, maintaining an "underperform the market" rating. However, the bank has raised its earnings forecast for 2025 to 2026 to reflect smaller declines in wind energy and CECEP Solar Energy unit taxable profits, of about 2 cents per kilowatt-hour annually. However, the bank's forecast is still about 11% lower than market estimates.