- We cut our target price (TP) for PC1 by 5% but maintain our MARKET PERFORM rating. 

- Our lower TP is due to our 5% lower aggregate 2023-2027F NPAT-MI forecast (-29%/-19%/-17%/+6%/+8% for 2023/24/25/26/27F, respectively) as we (1) decrease our assumptions for hydropower utilization rates from 39%-42% to 28%-32% in 2023-2025F following lower-than-expected H1 2023 results and our expectation for weak hydropower performance in 2024-2025F due to potentially continuing El Niño weather conditions and (2) lower our GPM assumption for the Nomura Industrial Park (IP) from 35% to 23%-25% over the entire forecast period to reflect lower-than-expected H1 2023 results. 

- We forecast 2023F reported NPAT-MI to drop 23% YoY mainly due to (1) a 40% YoY plunge in hydropower gross profit, (2) a 24% YoY decrease in power construction gross profit, and (3) a 46% YoY surge in interest expense, which outweigh the contribution PC1’s 51%-stake nickel mining company and 70%-stake Nomura IP as well as higher YoY gross profit from wind power.  

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