China's listed thermal power companies, which last year faced a double whammy of falling power demand and rising coal prices, are finding themselves on a better wicket this year.

Thermal power firms turn the corner in Q1 [CFP]

Many of the thermal power firms that had seen their profits plunge last year are now showing definite signs of recovery.

Ningbo Thermal Power Co, a relatively small-sized thermal power firm, said its first quarter net profits this year are expected to surge by 150 percent to 210 percent from a year earlier.

Shanghai Electric Power Company Limited, another listed thermal power producer, said it expects to post a profit in the first quarter after suffering a 126 million yuan loss in the same period last year.

Both the power firms attributed the better performance to falling coal prices, increasing power demand and tariff hikes.

Ningbo Thermal, which produces electricity and provides steam, reported earlier that its net profit fell nearly 20 percent last year from a year earlier, while Shanghai Electric Power said in its preliminary earnings report that it would suffer a loss of 1.5 billion yuan in 2008.

Among the 15 listed coal-fired power companies that have published their annual results, only two have managed to post a positive profit growth last year.

"The first quarter performance of thermal power firms is expected to be good as profitability stabilizes and increases," Shanxi Securities said in a report.

Coal prices, which began falling since November, and the power tariff, which was hiked twice last year, will boost the earnings of coal-fired power companies, it said.

"The wide gap between power and coal prices is expected to turn around the thermal power sector," Lianhe Securities said in a research note.

Thermal power firms turn the corner in Q1 [CFP]

The improving macro economy, the securities house said, will also boost power demand and improve the performance of thermal power companies.

China's electricity consumption fell 4 percent to 781 billion kWh in the first quarter from a year earlier, dropping at the slowest pace, thanks to the government's 4-trillion yuan stimulus package, China Electricity Council (CEC) said on Tuesday.

The year-on-year growth rate in power consumption is expected to turn positive in the third quarter of the year, if economic growth maintains the momentum of the first quarter, Zhang Yongjun, senior economist with the State Information Office, told China Daily.

CEC said earlier that it expects the country's electricity usage would increase 5 percent this year.

(China Daily April 16, 2009)