Asian utilities, especially those in the mainland that have outperformed their counterparts in the United States since the September 11 attacks and the demise of Enron, look set to embark on a strong growth cycle. Lehman Brothers analyst Angello Chan said share prices and valuations of Asian power companies had gained ground as investors became more concerned about the risks associated with investing in US power firms. This reversed the trend of most of last year, when Asian utilities were trading at substantially lower multiples than those in the US and Europe, largely due to overcapacity and weak demand following the Asian financial crisis. Mr Chan said H shares Beijing Datang Power Generation and Huaneng International Power, two of the mainland's largest independent producers, would face tremendous growth opportunities as China moved to dispose of part of its generating capacity. 'Before September 11, US generating companies were trading at the highest multiples due to their high growth prospects derived from both acquisition strategies and power demand forecasts,' he said. 'Success stories, such as AES, Dynergy and Mirant had all grown earnings tremendously through large acquisitions. 'We think it fair to say that in a fast-growing economy with light supply, acquisitions can be a major positive share-price driver. We think a similar situation to that which occurred in the US is now brewing in China for Huaneng and Beijing Datang.' It is widely expected that China's near-monopoly State Power Corp will offer some of its 150 gigawatts of capacity for sale as part of a far-flung overhaul of the fragmented and cumbersome power industry. State Power's installed capacity accounted for about half the country's total. Power reform has recently gained pace with a number of management reshuffles at State Power and a reform blueprint was expected shortly. US-based Enron, once a fast-growing energy group, has become the largest corporate bankruptcy case ever in US history. It is understood that the ill-fated energy group is seeking to dispose of its Asia-Pacific region power projects. These assets include five projects in southern and western China with gas transmission and power generation and one Australian power trading project. They also include projects in India, the Philippines, Japan and a gas distribution firm in South Korea. Mr Chan suspected SAR utilities Hong Kong and China Gas (Towngas) and CLP Holdings - might be among interested bidders. Towngas could be interested in Enron's 45 per cent in the Sichuan-Wuhan gas transmission project which involves building a pipeline, part of the 4,200km link transmitting natural gas from northwest Xinjiang to Shanghai. In an alliance with Royal Dutch/Shell, and Russian firms Gazprom and Stroitransgaz, Towngas is bidding for a slice of the pipeline project. It hopes to ensure a supply of natural gas to its downstream projects in Suzhou and Shanghai. 'According to Towngas management, they do not intend to bid for Enron's assets in China. However, we do not rule out the possibility that Towngas may change its mind,' Mr Chan said. CLP might want to acquire Enron's troubled power plant in Dabhol, India, given CLP's intention to accelerate its expansion and growth opportunities in the Indian power market. 'If CLP acquires this project, we believe it will only extend CLP's losses in its overseas investments,' he said.