Gelonghui, September 11 | Yamato released a report stating that due to potential cold winters and the sluggishness of the renewable energy industry, China Resources Electric Power's thermal power business is at risk of shrinking profits. China may face a cold winter brought about by the La Niña phenomenon this winter. As for the last winter in 2022, spot coal prices rose 39% year-on-year in the second half of the year, while Rundian's thermal power business recorded a net loss of 0.532 billion yuan during the same period. The bank believes that the market has ignored the relevant risks, and the official agency may confirm that the La Niña phenomenon will occur in the next few weeks, which is expected to be the main catalyst and inflection point. The bank raised its coal price forecast by 3% to 958 yuan per ton this year, and reduced its coal and power business profit forecast by 6.6% to 117 yuan per megawatt hour (MWh). Furthermore, the slump in Rundian's renewable energy business is expected to continue until the second half of the year. The impact of weak wind power in the first half of this year was significant. It is expected that the wind power business will not recover significantly in the second half of the year. The potential increase in renewable energy project pipelines in North China complicates future prospects. Daiwa downgraded China Resources Electric's rating from “holding” to “outperforming the market” and lowered its earnings estimate per share from 2024 to 2026 by 6% to 16% to reflect a downward review of the potential valuation, and lowered the target price from HK$20 to HK$17.7.