China Fortune Financial News APP learned that Bank of America Securities released a research report stating that it maintains a 'neutral' rating on huaneng power (00902) because the electricity price per unit of capacity is still a strong profit buffer, accounting for 45% of the overall pre-tax profit in the third quarter, with the target price slightly decreased from 4.9 Hong Kong dollars to 4.8 Hong Kong dollars. The bank believes that the valuation equivalent to a forecast market-to-book ratio of 1x is roughly reasonable, with a return on equity (ROE) of 10% and a yield close to 6%.

The report states that at the earnings conference of Huaneng Power International, it was mentioned that impairments may occur every quarter, and there may be some downward pressure on electricity prices in 2025, but it is still too early to make conclusive evaluations. The bank considers the underperformance in the third quarter compared to expectations and more impairments, leading to a downward revision in profit estimates, especially for this year, although the decrease is partially offset by lower unit fuel costs.

The bank stated that it has lowered its profit forecast for Huaneng by 15% for 2024, mainly due to a 4 billion yuan impairment, underperformance in the third quarter, and trends in unit fuel costs, and slightly lowered its profit forecast for the company for 2025 to 2026 by about 3% each, with next year's ROE forecast adjusted down to 9.9%.