CR Power ready for buying spree after income increases 36.2pc
China Resources Power Holdings, the fastest-growing Hong Kong-listed mainland power producer in terms of earnings, is ready to open its HK$4 billion war chest to acquire power assets this year, according to chief executive Wang Shuaiting.
Yesterday, the company posted a 36.2 per cent jump in net profit for last year to HK$3.22 billion on higher output from plants. The bottom line was 2.7 per cent lower than the HK$3.31 billion average estimate of 18 analysts polled by Thomson Financial.
Mr Wang said the prevailing tough operating environment presented opportunities to absorb poorly managed power producers and those hurt by high coal costs. 'In the first two months of this year, 70 per cent of power plants run by local governments were losing money,' he said.
China Resources Power plans to raise its equity-calculated generation capacity this year by 2,495 megawatts to 15,000 MW, of which 2,000 MW will be from acquired assets and the rest from new plants being built.
Among the assets is the Shenhai Thermal Power unit in Shenyang, Liaoning province, with a coal-fired installed capacity of 600 MW, for which it paid its parent 1.12 billion yuan (HK$1.24 billion) for 54.11 per cent.
Mr Wang declined to comment on whether the company would bid for the remaining two power firms to be sold by the Singapore government. The first, Tuas Power, was sold to the China Huaneng Group.
'We did not enter the final round of bidding for Tuas since, by that time, any deal would not meet our return requirement,' he said. 'We would not buy for the sake of expansion.'
The company this year aims to keep its plant utilisation steady at last year's 6,127 hours.
It also aims to limit the increase in its coal cost per unit of output to within 7 per cent this year, up from 2.3 per cent last year. The goal is much lower than Huaneng Power International's target of 18 per cent, Datang International Power Generation's 12 per cent and Huadian Power International's more than 16.4 per cent.
China Resources Power is seeking to invest in coal mines in interior provinces after it struck a deal in October last year to take an 80 per cent stake in a 16.5 billion yuan mining project in the Inner Mongolia autonomous region.
Slated to come on stream in 2010, the project will have an annual output capacity of 30 million tonnes. This is sufficient to meet about 60 per cent of the coal requirements of the firm's plants in eastern and southern coastal provinces.
The firm has budgeted 11.8 billion yuan to build plants and develop the coal mine and related infrastructure for this year, 10.6 billion yuan next year and 9.1 billion yuan in 2010.
It plans to raise its equity-calculated generation capacity to 18,000 MW next year and 21,000 MW by 2010.
The firm has acquired 80 per cent of an Inner Mongolia coal mine for, in yuan: 16.5b yuan