Zhi Tong Cai Jing·2025-11-27 03:48Group 1 - The core viewpoint of the report is that Morningstar has raised the fair value of China Longyuan Power Group (01038) by 3% to HKD 65, benefiting from a slight increase in profit expectations [1] - The stock is currently undervalued, with a projected price-to-earnings ratio of 15 times and a dividend yield of 4.8%, indicating a stable mid-term outlook [1] - Morningstar forecasts a compound annual growth rate (CAGR) of 6.3% in earnings per share over the next five years, driven by an increase in the regulated return rate reflecting significant rises in capital costs since the last adjustment [1] Group 2 - The allowed return rate is typically adjusted every five years and is expected to be higher than government bond yields, which have significantly increased since the pandemic [1] - Morningstar predicts a compound annual growth rate of 3% in dividends per share over the next five years, with expectations that management will control dividend growth to reduce the payout ratio to below 70% [1] - Due to the improving outlook for regulated utilities and higher return rates, the firm has raised its mid-term earnings per share forecast by an average of 2.4% [1]