by winston » Fri Aug 21, 2015 8:20 pm
vested
August 19, 2015
CGN Power: Where Is The Growth?
By Shuli Ren
Nuclear power generator CGN Power (1816.HongKong) fell 5.5% this morning after announcing disappointing first-half earnings.
Revenue in the first-half came in at 9.59 trillion yuan, a 1.6% decrease from a year ago.
Net profit rose by 36.1% year-on-year to 3.5 trillion yuan. But that is mainly because of a 1.3 trillion yuan gain from the stronger yuan.
Deutsche Bank estimates that CGN Power’s net profit rose by only 1% year-on-year if we exclude other one-offs like fair value changes on derivatives and interest income from its IPO proceeds.
CGN Power was at one point an investors and analysts’ darling. It went public last December, raising $3.2 billion, making it the largest IPO in Hong Kong in 2014.
There was a decent 19% first-day pop from the IPO price of HK$2.78 and CGN Power rose as high as HK$4.70 in June. But this stock has erased all gains since.
This is because a competitor China National Nuclear Power‘s (601985.China) went public in Shanghai in June, and then we had China’s stock market rout.
Unpersuaded by CGN’s soft power all along, Deutsche Bank’s Michael Tong and Yingying Dong were right. This morning, they re-iterated their Sell rating, saying that trading at 21.7 times 2015 earnings, CGN Power was still too expensive for a company that has not shown any growth.
Shanghai-listed China National Nuclear Power fell 3.6% this morning.
Source: Barron's Asia
It's all about "how much you made when you were right" & "how little you lost when you were wrong"