Datang International Power Generation, the largest electricity producer in the Beijing-Datang-Tianjin region, posted a 16.88 per cent growth in net profit for last year on the back of higher demand and new plant additions. Net profit amounted to 3.41 billion yuan (HK$3.78 billion) up from 2.91 billion yuan in 2006. Turnover surged 31.85 per cent to 32.82 billion yuan thanks to 26.55 per cent growth in generation, based on mainland accounting standards. The board agreed on 9.67 billion yuan of coal mining and coal-to-natural gas investment in the Inner Mongolia Autonomous Region and Liaoning Province. The company said it was aiming for an 18.37 per cent rise in power output this year, and wanted to keep fuel cost increases per unit of output within 10 per cent. Analysts were cautious about prospects for this year, expecting even higher increases in coal prices and interest costs. Merrill Lynch analysts Joseph Jacobelli and Vincent Chow estimate Datang will suffer a 4 per cent fall in per share earnings for every per cent rise in coal cost per unit of output. 'With a high net debt-to-equity ratio of 222 per cent this year, Datang is exposed to higher interest rates, with each quarter percentage rate hike resulting in a 3.4 per cent cut in per share earnings,' they said. Meanwhile, rival Huadian Power International director Zhong Tonglin yesterday said the company planned to raise its total generation capacity 83.9 per cent in the next three years to 40 gigawatts from 21.74 GW at the end of last year. The goal will primarily be achieved by building more plants and acquiring units from its parent, China Huadian Group. To realise the target, it has set aside 33.5 billion yuan of capital expenditure for the next three years. It is planning a 5.3 billion bond issue and another 5.3 billion yuan is to be raised through a warrant issue. The plan was unveiled after it posted on Tuesday a 0.43 per cent fall in net profit to 1.19 billion yuan as higher coal prices and a threefold jump in interest costs more than wiped out the benefits of a 40.46 per cent generation growth. Huadian has 7.7 GW of proposed coal-fired projects in Shandong, Henan, Anhui province, as well as the city of Chongqing and Ningxia autonomous region, waiting for central government approval. It also has a 1.52 GW Luding hydro project in Sichuan and 0.6 GW of wind power projects in Inner Mongolia and Ningxia autonomous regions and Hebei, pending approval.