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Two CRP plants back on line after snowstorms
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China Resources Power Holdings Co Ltd (CRP) has resumed operations at two generating plants that were shut down for two months after the worst snowstorms in half a century disrupted power lines across the country.

Both plants are located in southern Hunan province. They carry a combined capacity of 1,900 megawatts - about 15 percent of the company's total capacity in January.

They resumed full operations at the end of March, a company official with direct knowledge of the situation told Reuters, adding that the firm expects to maintain the same amount of power generation as it did in 2007, despite the shutdown.

"The impact to our performance this year will not be significant because we have done the annual maintenance and have secured enough fuel for the two plants during the shutdown period," the official said.

"We are very confident we can maintain the same generation level as last year, especially because power generated from the plants will be sold in the power-hungry Guangdong province," he said.

CRP turned in the best net-profit growth in 2007 among its listed peers, which include Huaneng Power International and Datang International Power.

But the picture isn't as clear in 2008, due to resilient coal prices and the two-month disruption. Neighboring Guangdong province - China's manufacturing hub - faced a 10-gigawatt electricity shortage during the peak disruptions in March, as harsh weather crippled already rickety power grids. CRP is a key supplier to that province.

Shares in the company jumped as much as 12 percent yesterday as analysts upgraded the company on solid fundamentals, saying it was their top pick among listed Chinese power firms.

Status upgrade

Merrill Lynch upgraded CRP from "neutral" to "buy" on better cost control and aggressive capacity expansion.

Analysts expect a much tougher situation for power firms this year because of record-high coal prices and little chance of an inflation-fearing government raising power tariffs in the near future.

"CRP remains our top pick in the sector," BNP Paribas analyst Daisy Zhang said. "Even in this tough environment, its margins should suffer less than its rivals'."

The firm's average unit fuel cost rose 2.3 percent in 2007 over the previous year. But that was significantly lower than larger rivals Huaneng Power's 10 percent rise and Datang Power's 13 percent jump.

CRP aims to keep its increase in unit-fuel costs within 7 percent this year, versus Huaneng's 18 percent and Datang's 12 percent.

And it plans to raise its attributable capacity by 20 percent to 15,000 megawatts in 2008, and further raise that to 18,000 in 2009 and 21,000 in 2010.

The company posted a 36 percent rise in net profits to HK$3.22 billion in 2007 on increased capacity and generation, compared with Huaneng's 1.5 percent rise in 2007 earnings and Datang's 23 percent jump.

(China Daily HK Edition April 3, 2008)

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