Dongfang Electric (01072) rose more than 5% in early trading. As of the time of writing, the stock was up 4.10%, trading at HKD 31.46, with a turnover of HKD 182 million.

This follows a research report from BofA Securities initiating coverage on Dongfang Electric with a "Buy" investment rating and a target price of HKD 33. This target implies a projected 2026 price-to-earnings ratio of 26 times. The bank expressed optimism towards Dongfang Electric, citing several key factors: strong revenue recognition driven by thermal and nuclear power equipment orders secured between 2021 and 2025; long-term profit contribution expected from the Yarlung Tsangpo River project (a dam project with capital expenditure reaching RMB 1.2 trillion); potential for expansion in gas turbine exports; and sustained growth in the power plant services business, which includes operations, maintenance, and flexibility upgrades.

BofA Securities forecasts that Dongfang Electric's net profit will achieve a compound annual growth rate of 13% from 2025 to 2027, benefiting from an upcycle in China's power sector capital expenditure. The company holds approximately a 40% market share in the nuclear and hydropower equipment markets and over a 30% share in the thermal power equipment market, positioning it as a primary beneficiary of China's significant investments in thermal and nuclear power from 2021 to 2025. Revenue recognition from equipment orders, coupled with rising average selling prices, is expected to drive steady growth in net profit.