Citi lowers the target price for CHINA RES POWER to 19 yuan, more optimistic about mainland power equipment suppliers next year

Citi published a research report downgrading the rating of CHINA RES POWER (00836.HK) from "Buy" to "Neutral," as the bank lowered its net profit forecast for CHINA RES POWER in 2026 by 8.3% and in 2027 by 7.9%. This adjustment was due to Citi's downward revision of coal-fired electricity price forecasts after CHINA RES POWER signed a contract with Guangdong Province (a 3.5% year-on-year decline in 2026, previously a 1.5% decline) and an upward adjustment of unit fuel costs for coal-fired power plants (a 1% year-on-year decline in 2026, previously a 3% decline).

Based on the DCF valuation method, Citi lowered the target price for CHINA RES POWER by 11.6%, from HKD 21.5 to HKD 19. For the outlook in 2026, Citi is more optimistic about Chinese power equipment suppliers rather than power generation operators, as the latter face the risk of declining profit margins due to falling market electricity prices, and currently, there is no power shortage in China