China Datang Corporation and China WindPower Group reported strong profit rises for the first half of this year, boosted by a rise in electricity output and sales.
Beijing has imposed limits on provinces' new wind-power capacity to curb overcapacity after wind farm construction outpaced the power grid. More than half of the wind-generated electricity was wasted because of insufficient transmission capacity, according to the State Electricity Regulatory Commission.
Wu Jing, vice-chairman of China Datang Corporation, said the company's projects should be able to be connected to the national grid. 'The construction of the power grid is ongoing. We have individual projects that are slightly outpacing the grid, but eventually they will be connected to the grid,' he said.
The firm is the clean-energy unit of China's second-largest power producer, China Datang Group. In the first half of the year, the company increased its installed wind power capacity by 114 megawatts to 4,142MW, up 52.5 per cent from the period last year.
Vice-president Hu Guodong told investors the company would meet its full-year target of installing 1,500MW in new capacity.
'We always focus on the installation in the latter half of the year. More than 90 per cent of the capacity is usually done between September and December,' Hu said.
China Datang Corporation reported revenue of 1.86 billion yuan (HK$2.26 billion), up 78.2 per cent, and net profit jumped by 105 per cent to 416 million yuan.
China WindPower Group said interim net profit rose 79 per cent to HK$237 million, but revenue fell 26 per cent to HK$258 million.
The wind farm developer blamed the revenue fall on the rise in the number of wholly-owned power plants under construction, severe weather conditions and delays in gaining project approvals.
The company has embarked on a 'sell some, build more' development strategy, as it seeks to realise gains from past investments and generate cash flows to fund new projects. In the first six months of this year, half of its profit came from wind farm sales.
China WindPower has applied for permission to spin off its tower tube manufacturing business on the Hong Kong Stock Exchange.
Chairman Liu Shunxing said it did not yet have a timetable for the spin-off. He could not say how much it hoped to raise, citing weak market conditions.
Both companies expressed plans to diversify and spend more on solar power. China WindPower said its first solar power plant, a 30MW project located in Qinghai province, was expected to start operating at the end of next month.
'The return rate will be more than 10 per cent,' Liu said.