Top wind power firms compete for IPO funds
China's largest wind power firm, Huaneng Renewables Corp, is to tap the Hong Kong stock market through a US$1.45 billion listing in a deal that will cross swords with its arch-rival.
Huaneng, the renewable flagship of the nation's largest independent power producer China Huaneng Group, will compete with China Datang Corporation Renewable Power, which is seeking to raise up to US$1 billion on the Hong Kong stock exchange.
Comparing the fundamentals of the pair, Huaneng executive director and president Zhao Shiming said yesterday that the group led the market with higher profitability, utilisation hours of its wind farms and earnings before interest, taxation, depreciation and amortisation in the past three years.
'We are having a roadshow at the same time, which is a good thing,' Zhao said. 'The capital market is not very good and has some volatility, but we are confident about our listing.'
Huaneng and Datang will add to a record of US$49 billion funds raised on the Hong Kong stock exchange through initial public offerings so far this year.
Huaneng plans to offer 2.48 billion H shares at a price between HK$2.98 and HK$3.98 a piece, with an option to offer an extra 372.85 million H shares. The sale price will be fixed on December 10.
Huaneng and Datang are expected to debut on December 16 and December 17 respectively.
Set up 10 years ago as a wind power play, Huaneng has since built a capacity of 1.86 GW scattered around six provinces including Shandong, Xinjiang, Inner Mongolia and Guangdong.
It plans to spend the proceeds to about double its installed capacity via funding the construction of 2 GW of wind energy projects, cutting debt and shopping for wind farms inside and outside mainland China.
Huaneng chairman and non-executive director Cao Peixi said parent China Huaneng Group promised to sell its wind power assets, totalling almost 939.4 MW of installed capacity, to Huaneng Renewables over the next five years.
Fulbright Securities general manager Francis Lun Sheung-nim said yesterday that Huaneng and Datang were jumping on the bandwagon of China's rapidly growing but nascent wind power sector.
'They are taking advantage of government subsidies,' he said.
'The listings will boost their war chests in taking up sites for wind projects.'
From the nation's perspective, it is a race to meet a target of having installed wind power capacity lifted to 150,000 MW by 2020 from 26,000 MW at the end of last year.
Lun said Huaneng and Datang were racing to buy as many sites as possible in the wake of diminishing virgin land supply as a result of rapid urbanisation.
He added that the pricing of Datang was more attractive.
Datang, which plans to offer 2.14 billion shares at between HK$2.33 and HK$3.18 each, has a price to earnings ratio of 13.1 to 17.9 times based on its forecast earnings for next year. This is lower than Huaneng's 14.7 to 19.6 times 2011 forecast earnings.
Huaneng planned to spend nearly one-third of its proceeds, or HK$2.7 billion, acquiring wind power projects in northern regions of the mainland and countries such as Australia, New Zealand, Brazil, Russia and India or where wind supply was abundant and regulations on the industry mature, Zhao said.
Huaneng and Datang secured cornerstone investors, with State Grid International Development - a unit of the mainland's largest state-owned grid company, State Grid - investing in both companies.
Huaneng and Datang are expected to debut on December 16 and December 17
Huaneng Renewables is hoping its Hong Kong offering will raise, in US dollars: $1.45b