Lyon: The privatization of Neoenergia (02688.HK) falls through, but valuation still attractive, target price lowered to 58.5 Hong Kong dollars.

According to the Wisdom Financial APP, Lyon released a research report stating that Xin Ao Energy (02688.HK) parent company Xin Ao Group (600803.SH) has withdrawn the privatization proposal, triggering a recent decline in stock price. The bank believes that the stock price has fallen to an attractive level, predicting a dividend yield of 7% in 2026, with the target price lowered from 75 Hong Kong dollars to 58.5 Hong Kong dollars. The current valuation is equivalent to an attractive forecasted PE ratio of 6.3 times for this year, maintaining an outperform rating. The bank has lowered its profit forecast for Xin Ao in the next two years by 5% and 22% respectively. Lyon expects Xin Ao Energy's net profit to increase by 18% year-on-year to about 6.9 billion yuan in 2026, mainly due to the contribution of wholesale gas gross profit reaching 1.4 billion yuan.