GLONGHUI, August 30 | J.P. Morgan Chase published a report saying that the favorable factors of the decline in coal prices may have been reflected in the strong recovery in profits in the first half of 2023. Considering the risk of electricity prices falling next year, corporate profit margins may be under pressure. Investors are advised to profit first from mainland power utility stocks that have outperformed stock prices from the beginning of the year to date. The bank explained that in a situation where the economy is sluggish and coal prices are low, independent power plants may have to reformulate power contracts at lower electricity prices starting next year. Also, after rapid approval of new coal-fired units since 2021, the number of hours of use may also face resistance in the medium term. As a result, the valuation appeal of independent coal-fired power plants has declined, and the premium price may exceed 20% compared to renewable energy operators. Motong downgraded the ratings of China Resources Electric Power and China Electric Power from “increase in holdings” to “neutral”, the target price of China Electric Power dropped from HK$21 to HK$17.5, and the target price of China Electric Power dropped from HK$3.8 to HK$3.2. Also, due to the AH share price difference, Huaneng A shares were included in the negative catalyst watch list. Huaneng H shares remained “neutral”, and the target price was reduced from HK$4.3 to HK$4.1.