Datang International Power

Power producers surge on funding hopes

PUBLISHED : Saturday, 10 January, 2009, 12:00am
UPDATED : Friday, 08 May, 2015, 9:35am

Shares of mainland power generators gained on speculation the central government would provide financial support for electricity producers by bolstering their capital bases, weakened by losses from power price controls, and compensating those that suffered damage in last year's Sichuan earthquake.

The speculation was sparked by an announcement yesterday by mainland-listed Guangxi Guiguan Electric Power, which said it had received 30 million yuan (HK$34 million) from the central government to finance post-quake reconstruction.

The company, a subsidiary of China Datang Group - the parent of listed Datang International Power Generation - said last May that two of its hydropower subsidiaries suffered a combined loss of about 30 million yuan from the quake.

That raised hopes that other listed power companies might also receive injections or handouts, but the stocks gave back most or all of their gains when that could not be confirmed.

Beijing has already injected capital into the country's struggling major airlines. Both the power and aviation sectors suffered from widespread losses because of high fuel costs, and are highly indebted.

Huaneng Power International surged 5.74 per cent before ending 2.49 per cent lower at HK$5.10. Datang International Power gained up to 8.29 per cent but closed 0.52 per cent lower at HK$3.84.

Huadian Power International and China Power International Development were the only two among the Hong Kong-listed mainland power generators that kept a large part of their gains.

Huadian soared as much as 16.87 per cent and closed up 7.23 per cent at HK$1.78. China Power rose 5.26 per cent to HK$1.60.

China Resources Power Holdings edged up 1.88 per cent to HK$14.06.

Representatives of the listed power companies said they had not heard they would receive any imminent government handouts.

However, one of them said: 'I believe there is a good possibility that the five state-owned national power generation groups, that is, the listed firms' ultimate parents, may get some injections and subsidies.'

Last November, the central government said it had allocated 54.78 billion yuan of state capital from the Ministry of Finance's 2007 budget for state-owned companies.

About 27 billion yuan was slated for enlargement of state capital in the largest state-owned enterprises, 19.6 billion yuan for companies' post-disaster reconstruction and 8.15 billion yuan to fund industry restructuring.

An industry official said the injection might partly be carried out by exempting dividends owed to the state.

From last year onward, wholly state-owned enterprises in the energy sector were required to hand over 10 per cent of their profits to the central government as dividends.

Investors were betting that part of the injections of funds and subsidies would trickle down to the listed units, although it is far from certain.

'It is not yet apparent whether the listed units will get any benefit,' the spokesman said.