DBS has released a research report stating that CHINA RES POWER (00836) added 11.6GW of renewable energy capacity last year and plans to add another 10GW of capacity this year, along with approximately 6GW of thermal capacity. The bank believes the company's expansion plan is more aggressive than expected.

Due to the company's power generation growth of 3.6% in the first half of this year, which fell short of expectations, DBS has revised down its power generation growth forecast by 8.4 percentage points, now estimating growth rates of 4% to 9% for this year and next year. The bank also lowered its earnings forecasts for the company by approximately 4% for this year and next year, cutting the target price from HK$24 to HK$22.6 while maintaining a "Buy" rating.

DBS noted that coal prices have declined significantly, with fuel costs expected to decrease by 8%, which should help alleviate some pressure from electricity tariff reductions. The bank expects the company's overall operating profit margin to rise from 22.1% in FY2024 to 23.4% this year and further increase to 25.3% next year.