Does Huadian Power International’s 2025 Rally Reflect Its Full Potential After Q1 Earnings Growth?

Deciding what to do with Huadian Power International stock right now? You are not alone. This company has been steadily catching more attention in the market, and with a last close at 4.55, investors are wondering if there are more gains on the horizon or if the current price already reflects all the good news. Over the past year, Huadian Power International has delivered a standout 23.4% annual gain, extending to an impressive 225.1% return across the last five years. Year-to-date, the stock is still up 17.0%, showing ongoing momentum, although its performance has flattened out in the last week.

Much of Huadian’s broader strength can be traced to positive sentiment surrounding renewable energy policies and China’s focus on power infrastructure. As market perceptions of risk have shifted, investors seem to be pricing in more growth potential for the company. But is the stock undervalued, or have these moves already factored in the future upside?

Looking through a valuation lens, Huadian Power International scores a 4 out of 6 on traditional valuation checks. This suggests the stock may still be undervalued in several important respects. Before you make any decisions, let’s break down what these valuation checks really mean and which ones matter most. In fact, there is an even better way to understand Huadian’s value that we will get to at the end of this article.

Why Huadian Power International is lagging behind its peers

Approach 1: Huadian Power International Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's value. This helps investors gauge whether the current market price reflects genuine long-term potential.

For Huadian Power International, recent reported Free Cash Flow (FCF) stands at CN¥13.8 Billion. Analysts expect this figure to decrease in the near term, with a projected FCF of CN¥9.9 Billion by the end of 2023. However, longer-range forecasts, using industry-standard projections and Simply Wall St's extrapolation, suggest a recovery and notable growth. Ten-year projections reach as high as CN¥62.2 Billion by 2035.

By discounting each of these annual cash flows at an appropriate rate, the DCF model calculates a present-day intrinsic value per share of HK$40.65. With the current market price at HK$4.55, this model implies the stock is trading at an 88.8% discount to its estimated fair value, suggesting substantial upside potential.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Huadian Power International.

Our Discounted Cash Flow (DCF) analysis suggests Huadian Power International is undervalued by 88.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Huadian Power International Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used metric for valuing profitable companies like Huadian Power International because it shows how much investors are willing to pay for each dollar of earnings. When a company is generating consistent profits, PE provides a quick snapshot of how the market views its growth prospects and risk.

It is important to remember that growth expectations and risk perceptions play a major role in what is considered a "normal" or "fair" PE ratio. Higher growth companies or those with more stable earnings often command a premium. Conversely, companies facing greater risks or slower growth usually trade on lower multiples.

Currently, Huadian Power International trades at a PE ratio of 9.33x. For comparison, the average PE among its peers is 8.87x, and the Renewable Energy industry broadly averages 16.17x. This places Huadian's multiple just above its peer group, while still well below the broader industry average. This may indicate the market has recognized some of its growth but remains cautious.

This is where Simply Wall St's proprietary "Fair Ratio" comes in. The Fair Ratio for Huadian is calculated at 13.17x, reflecting its growth profile, risk level, profit margins, and its market position. Unlike a basic peer or industry average, the Fair Ratio adjusts for these company-specific factors, delivering a tailored benchmark to judge value.

With Huadian's actual PE at 9.33x and a Fair Ratio of 13.17x, the stock trades well below where it would be considered fair value given its fundamentals. This suggests there could be meaningful upside ahead.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Huadian Power International Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your personal story about a company, connecting your perspectives or insights to key financial assumptions like future revenue, earnings, and profit margins. Rather than relying solely on traditional metrics, Narratives allow you to tie the company's bigger picture, such as its strategy, risks, and opportunities, directly to a concrete financial forecast and an estimated fair value.

On Simply Wall St's platform, Narratives are easy to use and can be created or explored by anyone through the Community page, which is used by millions of investors. With Narratives, you can quickly see how your outlook compares to others, and check whether the current share price looks attractive relative to each Narrative’s fair value. As new news or earnings results become available, Narratives update in real time so your analysis is always relevant.

For example, some investors using Narratives see Huadian Power International’s fair value at the very high end, based on aggressive forecasts, while others use the lowest estimates and arrive at a more cautious fair value. With Narratives, you can easily choose or build the story that best matches your view and make smarter, more confident investment decisions.

Do you think there's more to the story for Huadian Power International? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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