BEIJING Datang Power Generation is among the mainland's largest independent power producers, with capacity of 3,450 megawatts at the end of last year. ABN Amro Asia has put a buy recommendation on the stock, rating it as undervalued. The brokerage said the counter was trading at a 26 per cent discount to net fair value, which it estimated at $3.04 per share and 9.7 times projected earnings. Investors appeared to have ignored expansion of capacity and market improvements, both of which ABN Amro said would increase shareholder value. The capacity expansion, instead of higher tariffs or utilisation rates, would aid earnings and cash flow. Stronger demand for power in northern China also would boost Beijing Datang, which had the go-ahead to increase capacity by almost 60 per cent by 2002 and was seeking approval on other projects. ABN Amro described the stock as one of the most defensive China plays available, due to its cash bank of 624 million yuan (about HK$580 million) and its freedom from US dollar debt.
