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Monday, 05/10/2021 7:40:05 PM

Monday, May 10, 2021 7:40:05 PM

Post# of 7
IMO, HNP is way undervalued.

Analysts have trashed it, probably rightly so at the time. But the damage (price drop) has been done, and current price is not representative of what the company is really worth. The following is what I wrote up for someone (good & bad points) looking for a pick back in February when the price was below $13. I think this analysis still holds water. Please LMK if you think I'm way off base on anything.

• It is (or was) primarily a coal based electricity provider. This is bad because China starting in October announced a government mandated shift to green energy (which is why my solar based Chinese stocks have taken off)
• BUT… This company has divested some of its coal plants. Plus it has also been adding several different types of green power plants. (solar, wind & biomass).
• It also builds green power plants for other companies other than itself.
• I am not sure about the mix of coal vs. green (most of the financials on their site are in .pdf format in Chinese); but they’re moving in the right direction.
• Analysts have been giving this company negative & sell ratings starting in October because they’re primarily coal and China is now pushing green. Plus the price of coal has increased and should reduce profits.
• Even during a bull market all this has succeeded in pushing the stock value down; and even though coal price increases have reduced profits; they were still profitable during that time. Therefore the value as a company is still the same or higher than it was when it was trading at close to $20.
• It appears (just my best guess) as though the price drop has hit bottom. Their tangible price book ratio is about .5 Anything below 1 is generally undervalued; assuming the financial statements aren’t fudged. But even so, a ratio that low is insane. Price/book ratio’s don’t universally mean the same thing. But for the energy utility industry average is between 4 & 5.
• They also pay dividends regularly. Which is a good thing but that is normal for the industry.
• Morningstar has a target of $22; but they don’t say when.

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