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2009-3-30 04:23:00 p.m. HKT, XFNA
DJ MARKET TALK: Goldman Cuts Harbin Power To Sell From Neutral
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| 1606 [Dow Jones] STOCK CALL: Goldman Sachs downgrades Harbin Power Equipment (1133.HK) to Sell from Neutral, cuts target price to HK$4.30 from HK$6.70. Says concerns on power-equipment sector deepening on view negative sector operating leverage should subject firms to considerable downside earnings risks as sales volume decline, further sector de-rating possible in negative growth era, unsatisfactory execution track record could suppress stock price. Says disappointing capacity addition data over next few months could deepen industry woes as government stimulus package may offer few direct benefits. Notes stock trades at 2009E P/E, P/B of 8.6X, 0.8X respectively vs March 2005 trough of 4.2X, 0.6X, despite worsened industry outlook. Cuts 2010-11 EPS estimates by 32% each on lower profit margins. Keeps Conviction Sell on peer Shanghai Electric (2727.HK) on unwarranted valuation premium. Harbin down 9.7% at HK$5.02; Shanghai Electric down 7.1% at HK$2.23. (LES) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
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(Delayed by 1 hour)
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