Acquisitions to boost GCL-Poly capacity 61pc

Listing candidate GCL-Poly Energy, which is 21 per cent owned by Hong Kong-listed Poly (Hong Kong) Investments, expects its attributable capacity to grow 61 per cent to 747 megawatts by the end of next year on the back of planned acquisitions, according to a pre-listing report.

The report by BOC International, a syndicate member of the offering, said the firm had signed deals with its controlling shareholder that could allow GCL-Poly to acquire four power plants and one wind farm project in Inner Mongolia, bringing in an additional 183 MW attributable installed capacity.

The acquisitions are expected to be completed this year, the report said.

GCL-Poly planned to raise about HK$1 billion through share sales in Hong Kong next month, market sources said, adding Morgan Stanley had been hired as sponsor.

The company, which engages in the development and operation of cogeneration plants in Jiangsu and Zhejiang provinces, owns 10 power plants and had minority interests in five cogeneration power plants with a total attributable installed capacity of 464.26 MW as of April.

Cogeneration plants consume a fuel, often natural gas, to produce electricity and thermal energy in the form of steam or hot air which is then used to generate power. Such plants are more efficient than conventional power plants.

GCL-Poly acquired five associated cogeneration plants from the Poly group for 410 million yuan under a deal sealed in July, bringing in the Chinese firm as a strategic investor.

The move allowed the firm to boost its installed capacity by 20 per cent to 558.11 MW.

GCL-Poly has a diversified and balanced fuel mix to drive its plants, with natural gas contributing about a third and coal just under a third, while biomass makes up about 12 per cent of its fuel.

BOC International values the firm at HK$2.83 billion to HK$3.69 billion, or 10.2 times to 13.3 times forward earnings.

'The offering seems attractive as its power plants are all environmentally friendly, which is currently strongly supported by the government's clean and alternative energy policy,' said a fund manager who was invited to join the offering.

GCL-Energy was expected to almost double net profit this year to HK$114 million from HK$58 million last year, on an 81 per cent increase in revenue, BOC International said.

The bank said net profit would more than double next year to HK$278 million after its power plants become fully operational.