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More Gains for Power Companies

Two Hong Kong-listed mainland power generators have reported a surge in profits for last year, courtesy of production capacity expansion and robust electricity demand.

Beijing Datang Power Generation Co, the second-largest Hong Kong-listed generator of electricity in China, posted a net profit of 1.8 billion yuan (US$216.7 million), rising 29 percent year-on-year, it said Wednesday.

Earnings per share rose 0.35 yuan (4.2 US cents) from 0.27 yuan (3.3 US cents). Sales increased by 24 percent to 9.95 billion yuan (US$1.2 billion).

The result is above the average estimation of 1.76 billion yuan (US$212.8 million), predicted by 20 analysts in a poll by Thomson First Call.

Last year's performance was mainly boosted by an increase in electricity generation of 28.4 percent to 41.2 billion kilowatt-hours.

On Tuesday, Huaneng Power International - China's largest independent power producer - surprised the market with a profit increase of 39 percent for 2003.

The company said its net profit for last year jumped to 5.43 billion yuan (US$656.5 million) from 3.92 billion yuan (US$474.0 million) in 2002, beating the average forecast of 4.94 billion (US$597.3 million) by the 20 analysts.

Huaneng's revenue for 2003 rose to 23.39 billion yuan (US$2.8 billion) from 18.47 billion yuan (US$2.2 billion), with a production increase of 27 percent year-on-year.

"Basically, Chinese power companies are benefiting from the generation increase. The nation-wide electricity shortage also helps the companies cash in on that growth," said an analyst with a Beijing-based investment bank.

China's power consumption grew 15 percent in 2003, almost twice the rate of generation capacity. The shortage led to blackouts in two-thirds of the nation last year.

Commenting on Huaneng's surprising growth, the analysts said the market may have underestimated the on-grid electricity tariff for Huaneng's plants.

Analysts say the power companies can maintain double-digit development this year given the growth of electricity generation and that power shortages may deteriorate further.

They said Datang will drive generation growth this year due to the completion of construction of new generators with a combined capacity of 2.9 million kilowatts. And Huaneng may acquire generating assets from its parent company, Huaneng Group, to boost growth.

Shares of Datang rose by 3.1 percent to end at HK$6.5 (83 US cents) yesterday in Hong Kong. The stocks have more than doubled in the past 12 months.

Huaneng's shares jumped by 8.1 percent to touch a one-year high of HK$15.2 (US$1.9).

(China Daily March 18, 2004)

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