China Longyuan Tariff Outlook Expected to Improve in 2027 — Market Talk

What happened

Deutsche Bank analyst Gary Zhou says China Longyuan Power’s earnings may be nearing an inflection point, with a better tariff outlook in 2027 and favorable provincial bidding for mechanism tariffs supporting the company. He keeps a buy rating but cuts the target price to HK$6.70 from HK$7.00 after weaker-than-expected third-quarter results.

Confirmed

Global impact / market context

If tariff rates improve and provincial bidding remains favorable, China Longyuan could receive better prices for the power it sells, supporting revenue and earnings. The lower target price shows that weaker third-quarter results still weigh on the analyst’s valuation, despite the expected improvement.

Analyst inference

The article reports the shares up 1.8% at HK$5.17 and describes valuation at 0.5 times book value, meaning market value relative to the recorded value of assets minus liabilities. The analyst retains a buy rating while reducing his target price.

Confirmed

What to watch

1. Check whether tariff outlook expectations for 2027 improve in practice, since stronger rates could lift revenue from electricity sales and support earnings. Analyst inference
2. Watch results from provincial mechanism-tariff bidding; the analyst says favorable outcomes across several provinces would support China Longyuan. Analyst inference
3. Review future quarterly results against the weaker-than-expected third quarter, which prompted Deutsche Bank to lower its target price to HK$6.70. Analyst inference

Evidence

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