Yamato: Credit rating of XINYI ENERGY (03868) upgraded to "Hold", target price raised to 0.9 Hong Kong dollars.

Yamato has released a research report stating that XINYI ENERGY (03868) has seen a significant decrease in financial expenditure as interest rates continue to decline, but valuation pressure and other issues related to renewable energy remain unresolved. The company's rating has been upgraded from "underperform" to "hold" with a target price raised from 0.81 HKD to 0.9 HKD. The bank expects the US to cut interest rates by a total of 100 basis points this year, and estimates further cuts of 100 and 50 basis points in 2025 and 2026 respectively. They anticipate the company's borrowing expenses to range from 108 million to 185 million HKD from next year to 2026. Additionally, the bank has expressed a more pessimistic outlook on independent renewable energy power plants in the past two months, mainly due to the increasing problem of curtailment and downward pricing trends, which are expected to continue into next year.