Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

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Equity Bottom-Up

We raise our fair value estimate for no-moat-rated Datang to HKD 2.50 per share from HKD 2.20, following the completion of its coal-chemical asset restructure on Aug. 31, and management’s recent updates on its interim 2016 results. We think Datang’s coal-chemical disposal is a positive move toward restoring shareholder confidence, and despite the huge one-off impairment, we see long-term benefits that allow the firm to refocus on its core power activities, and improve returns and cash flows. While in the power-generation segment, despite strong performance that beat our expectation for first-half 2016, and a moderate recovery in coal-fired power demand since July, we see pressures to margins. Unit coal prices rebounded more than 20% sequentially, and there is the risk of a lower average tariff amid the growing share of direct power sales in the second half. As such, we expect a weaker second-half 2016 contribution and leave our profit forecasts unchanged.We think the shares are slightly undervalued currently, trading at only 0.6 times price/book, with an improved long-term outlook following the coal-chemical asset disposal.Analysts: Jennifer Song &amp; Lorraine Tan, CFA

We raise our fair value estimate for no-moat-rated Datang to HKD 2.50 per share from HKD 2.20, following the completion of its coal-chemical asset restructure on Aug. 31, and management’s recent updates on its interim 2016 results. We think Datang’s coal-chemical disposal is a positive move toward restoring shareholder confidence, and despite the huge one-off impairment, we see long-term benefits that allow the firm to refocus on its core power activities, and improve returns and cash flows. While in the power-generation segment, despite strong performance that beat our expectation for first-half 2016, and a moderate recovery in coal-fired power demand since July, we see pressures to margins. Unit coal prices rebounded more than 20% sequentially, and there is the risk of a lower average tariff amid the growing share of direct power sales in the second half. As such, we expect a weaker second-half 2016 contribution and leave our profit forecasts unchanged.We think the shares are slightly undervalued currently, trading at only 0.6 times price/book, with an improved long-term outlook following the coal-chemical asset disposal.Analysts: Jennifer Song &amp; Lorraine Tan, CFA

Datang's Core Business On Track; Coal-Chemical Restructure Is a Long-Term Positive.

Datang International

Datang's Core Business On Track; Coal-Chemical Restructure Is a Long-Term Positive.