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2009-2-6 10:51:00 a.m. HKT, XFNA
DJ MARKET TALK:Sell HK-Listed Power-Equip Plays Into Strength-UOB
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| 1037 [Dow Jones] HK-listed China power-equipment plays aren't fully discounting expected sharp decrease in government spending on sector, UOB KayHian says; keeps China's power equipment sector at Underweight, tips selling into strength. Says flat CNY580 billion spending plan focuses on new energy, power grids; estimates new investment in those areas to increase by strong 25% and 50%-100% respectively this year, implying significant 35% on-year fall in thermal equipment investment. Says channel checks reinforce view product delivery to decline, estimates 2009 new orders to drop 80%. Says consensus earnings forecasts too optimistic, may lead to sector derating. Cuts Harbin Power (1133.HK) FY09-10 net profit forecasts 9%, 7%; sets fair price at HK$3.50 based on 0.42X FY09 P/B. Cuts Shanghai Electric (2727.HK) 2008-09 net profit forecasts 9%, 22%, sets fair price at HK$1.40 based on blended P/B. Keeps both at Sell. Harbin +2.5% at HK$6.14; Shanghai Electric +2.7% at HK$2.71. HSI +2.2%.(LES) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
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(Delayed by 1 hour)
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