CGN Power
How to build a life-of-asset DCF with no terminal value for a utility, and how to argue Sell on a well-liked IPO.
- Rating
- Price target
- HKD 2.90
- Published
- January 7, 2015
- Length
- 55 pages
- Sector
- Nuclear power
- Market
- China
What the analyst argued
A month after CGN Power's IPO, Deutsche Bank initiated with a Sell, accepting that the company was a prime beneficiary of China's shift away from coal but arguing that a 26% post-listing gain left the shares at 20x 2015E earnings and 20% above a DCF value of HK$2.90. Four concerns drove the call: execution risk on the Taishan EPR reactors (the world's first of their kind), falling utilisation in regions with power oversupply, operational challenges, and understated decommissioning liabilities. The DCF ran plant-by-plant through 2060 with zero terminal value and a 6.9% WACC.
Lead analysts: Michael Tong, Yingying Dong.
Inside the report
- 01Investment thesis
- 02Valuation (DCF is our preferred approach given visible cash flow)
- 03Key upside risks
- 04Taishan project - an outlier for CGN
- 05Profitability risk for other units
- 06Key operating assumptions
- 07Financial outlook
- 08Balance sheet and cash flow analysis
- 09Company background
- 10Appendix A: comparison with CNNC
- DCF
- P/E
- EV/EBITDA
- Price-to-book
- Comparable companies
Includes a multi-year earnings model with the income statement, balance sheet, and cash flow forecasts the valuation is built on.
Read the report
55 pages
Tap the cover to open the PDF.Published by Deutsche Bank on January 7, 2015 and hosted here for educational use; the report and everything in it belongs to Deutsche Bank. The rating, estimates, and price target are the analysts’ view on that date, more than a decade ago, and are not a recommendation today. Copy first uploaded October 5, 2026.
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