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Monday 8 November 10:42 PM
INTERVIEW:China Pwr To Buy 25% Of Shanghai Elec In 05 -2(MORE) Dow Jones Newswires November 08, 2004 03:03 ET (08:03 GMT) China Power To Buy 25% Shanghai Elec From Parent In '05 (MORE) Dow Jones Newswires November 08, 2004 03:04 ET (08:04 GMT) INTERVIEW: China Power To Buy 25% Of Shanghai Elec In 05
HONG KONG (Dow Jones)--China Power International Development Ltd. (2380.HK) said it will acquire the 25% stake in Shanghai Electric Power Co. (600021.SH) owned by its parent, China Power Investment Corp., some time next year to help achieve the company's goal of tripling capacity by 2007. "We'll start the feasibility study of acquiring the Shanghai Power stake by the end of 2004 and plan to include this asset in the company next year," China Power Chief Executive Li Xiaolin told Dow Jones Newswires. Li, the daughter of former China Premier Li Peng, didn't disclose financial details. China Power is the smallest of China's Hong Kong-listed state-run power producers in terms of production capacity and market capitalization. For investors, however, China Power is a closely watched mainland company after its public offering in October turned out to be Hong Kong's hottest listing so far this year due to heavy oversubscription. In a move that should help strengthen the earnings of China Power and other mainland producers amid rising coal prices, Li said Beijing has agreed in principle to adjust electricity tariffs to movements in coal prices. This is believed to be the first confirmation of reports that China's State Council, the country's top government agency, is planning further relief measures for the industry from the impact of a sharp rise in coal prices. "I hope the policy can be launched by the end of this year or early next year," said Li, adding that the National Development and Reform Commission is working on a detailed proposal. (MORE) Dow Jones Newswires November 08, 2004 03:33 ET (08:33 GMT) INTERVIEW:China Pwr To Buy 25% Of Shanghai Elec In 05 -2 She said under one of the options being considered, electricity producers can pass on 70% of coal price increases to end users and absorb the rest. However, the impact of coal prices on China Power is less significant than on its rivals, Li said. She said mine-mouth plants - plants located next to coal mines - account for about 80% of the company's capacity. Li said China Power, which currently has an attributable installed capacity of 3,010 megawatts, plans to triple its capacity by 2007, through acquisition and construction of new plants. "We should have an extra of about 3,000 megawatts through acquisition in 2006 and another 3,000 megawatts in 2007 when the plants now under construction start operation," she said. The acquisition targets include the 25% stake in Shanghai Electric Power and also other assets owned by China Power's parent. China Power has been granted an option by its parent to buy the 25% stake in Shanghai Electric Power, which posted a net profit of CNY402 million (US$48.6 million) in 2003. Li said among the six power plants that are managed by China Power on behalf of its parent company, Shentou in Shanxi province with an installed capacity of 1200 megawatts, and Qinghe in Liaoning province with a 1200-megawatt capacity, are more likely to be the acquisition candidates as they are either "finished or closed to finishing the restructuring." China Power has forecast a net profit for 2004 of no less than CNY633 million in its listing prospectus. "We should maintain a growth in net profit in the third quarter and should be able to meet our 2004 profit forecast," Li said. But its rivals are working overtime to keep profit growth from slipping. Huaneng Power International Inc. (0902.HK), China's largest listed electricity provider whose chairman is Li Xiaopeng, Li's elder brother, already reported an 18% drop in third-quarter net profit due to surging coal prices. According to some analysts' statistics, the Li family controls about 20% of China's total installed capacity. Li Xiaolin said she disagrees with this view, adding that her family is in the business "to manage, to serve, not to control." "My father who was in the industry, my brother, and I all serve the industry with our passions and hope to build more power plants for the country. That's it," she said. -By Carmen Chan, Dow Jones Newswires; 852-2802-7002; carmen.chan@dowjones.com
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