Citigroup released a research report stating that, based on the latest information from CHINA LONGYUAN (00916), due to competition leading to a reduction in electricity prices and delays in the commissioning of new capacity, the pure profit forecasts for this year and next year have been lowered by 4.1% and 9.2% respectively. The bank has lowered the Target Price for CHINA LONGYUAN by 10% to HKD 7.20. A 'Buy' rating is given, based on its forecast PE of 7.1 times and a price-to-book ratio of 0.6 times, indicating cheap valuation.
Citibank predicts that CHINA LONGYUAN's pure profit increased by 2.9% year-on-year to 6.381 billion RMB last year, and that impairment losses decreased year-on-year in the fourth quarter, with improvements compared to the first three quarters. However, the bank's profit forecast for the company last year is 5% lower than the market's forecast, and it is not expected to meet the target. At the same time, it is anticipated that after the company announces its performance in March, the market will lower its earnings forecasts for this year and next year.