UPDATE: Citigroup Upgrades Huaneng Power International to Buy; Lower Coal Cost

Citigroup raises its rating on Huaneng Power International

from Neutral to Buy and raises its price target to $29.60. Citigroup comments, "We raised Huaneng's FY12-14E net profits by 28-30% and DCF TP by 40% to $29.60 mainly for lower unit fuel costs (-2% YoY in 2012E, from flat) after our recent visit. It has high coal inventory of 19 days and does not expect a rise in spot coal prices amid ample supply. Freight rates, representing 15% of coal cost, also fell 18-31% since early Apr. Its 9.9x FY12E PER looks inexpensive. We upgrade Huaneng to Buy." HNP closed at $24 on Thursday.