BofA Securities: Maintains "Underperform" rating on HUANENG POWER (00902) with target price lowered to 5 Hong Kong dollars.

Bank of America Securities released a research report stating that considering the decline in electricity prices and the rise in fuel costs, they have lowered HUANENG POWER (00902) profit forecasts for the years 2026 to 2027 by an average of 21%. The target price has been lowered from HK$5.5 to HK$5. Huaneng Power International, Inc. (600011.SH) A-share target price has been lowered from RMB 6.9 to RMB 6.3, based on a forecasted market-to-book ratio of 0.95 times, corresponding to a forecasted equity return rate of 7.5% in 2027. The bank maintains a "underperform" rating on both H-shares and A-shares, believing that the decline in electricity prices and the increase in fuel costs will drag down this year's profits. The report points out that the management of HUANENG POWER has a pessimistic view on electricity price prospects, with the target electricity price decline in 2026 expected to be less than 3 fen per kilowatt-hour. The company has already achieved this target in the first two months of this year, mainly supported by ancillary services and spot market trading. The company expects coal consumption in 2026 to be similar to that in 2025, with one-third coming from imports. Although import prices have risen, the management believes that a stable domestic supply-demand relationship does not support an increase in coal prices.