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2009-3-12 04:24:00 p.m. HKT, XFNA
DJ MARKET TALK: MS Cuts China Capital Goods Sector To Cautious
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| 1611 [Dow Jones] Morgan Stanley downgrades view of China's capital goods sector to Cautious from In-Line on more bearish industry view, with bottom not in sight vs previously expecting recovery in 2010. Downgrades Harbin Power (1133.HK) to Underweight from Overweight, cuts target to HK$3.45 from HK$8.53. Keeps Dongfang Electric (1072.HK) at Equalweight, cuts target to HK$14.90 from HK$22.44. Keeps Shanghai Electric (2727.HK) at Underweight, cuts target to HK$1.50 from HK$2.00. Cuts 2010 earnings forecasts by 35%-62% to reflect lower output, gross margin assumption. "We view Dongfang Electric as the best player given its excellent position in the booming wind power business and expected continued earnings growth in 2009 & 2010. Shanghai Electric is likely to suffer the most in the coming cycle downturn as it has the highest exposure to thermal power and overseas market." Dongfang Electric up 0.4% at HK$14.48, Shanghai electric down 6.8% at HK$1.91, Harbin Power down 5.0% at HK$4.40. (LES) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
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(Delayed by 1 hour)
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