BOCI Ups China Power To Buy; Better Asset Mix

1431 [Dow Jones] STOCK CALL: BOCI upgrades China Power (2380.HK) to Buy from Hold, target price to HK$2.70 vs HK$1.70; says China Power undergoing transformation to have better asset portfolio, will benefit from new energy projects of parent China Power Investment Group, leader in hydropower, nuclear power development among 5 major players. House assumes Wuling acquisition in earnings model, raises FY09-11 EPS forecasts by 51%, 67%, 48% respectively. Estimates Wuling, potentially other asset injections will raise DCF-based valuation of China Power, as profit margins of hydropower units much higher; adds, hydropower tariff will be gradually raised to match coal-fired benchmark, margins may expand further. Stock down 1.3% at HK$2.36; HSI +2.4%. (RLI)

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