Yamato released a research report saying that looking ahead to next year, the ranking is nuclear/coal/hydropower, and finally renewable energy. The bank raised the target price of CGN Power (01816) from HK$2.1 to HK$2.9; and upgraded China Resources (00836)'s rating from “outperforming the market” to “holding”. Weak factors have eased and the yield reached 4%.
The bank believes that hydropower is overvalued in the industry and requires a better time to enter the market; the utilization rate of renewable energy and the reduction in electricity prices are still a problem. Yamato explained that the electricity sector led the overall market in the first three quarters, benefiting from the defensive nature of these stocks in the face of continued “risk reduction” sentiment. However, the bank notes that since October, investors have clearly turned their preferences to risk. This shift in outlook has led to capital outflows from power stocks to other industries, and the bank believes this situation will continue until 2025.
