Citigroup: Maintains "Sell" rating on CGN POWER (01816) with target price raised to HK$3.2

Citigroup has released a research report stating that the new electricity pricing mechanism for nuclear power in Liaoning Province is good news for CGN POWER (01816), helping to reduce its electricity price uncertainty in the region. About 70% of its output can be sold at a fixed electricity price, and a similar mechanism may also be implemented in Fujian this year. Citigroup believes that this will help alleviate the downside risk of CGN POWER's electricity prices, and therefore has raised the group's net profit forecast for the next two years by 5% and 1% respectively to reflect the reduced impact of electricity price cuts. The bank believes that CGN POWER's forecast dividend yield this year is only 2.9%, which is not attractive enough, and maintains a "sell" rating on it, raising the target price from HK$2.6 to HK$3.2.