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REE [BUY +43.3%] - Well positioned to enjoy power sector liberalization - Initiation

We initiate REE with BUY rating and 43.3% TSR, including a 5.7% dividend yield. We project 2017 revenue growth of 34.6% and EPS growth of 31.3% as good weather conditions boost profit for REE’s hydro portfolio, PPC rebounds and M&E performs well. 2018 earnings should be flat given 2017’s high base. However, 2019 and 2020 earnings will grow 4.5% and 13.6%, respectively, with contributions of E-town Central and Upper Kon Tum.