Mon, Aug 23, 2004 - Page 10 News List

Datang's profit may rise

BLOOMBERG

Datang International Power Generation Co (大唐國際發電), the second-largest Chinese power producer listed in Hong Kong, may say profit rose 31 percent as it generated more electricity and controlled fuel costs better than rivals.

Net income at the Beijing-based company probably climbed to 1.03 billion yuan (US$124 million), or 0.2 yuan a share, for the first six months from 784.2 million yuan, or 0.15 yuan, a year ago, according to the median estimate of nine analysts in a Bloomberg News survey. Profit estimates ranged from 883 million yuan at Goldman, Sachs & Co and 1.08 billion yuan at UBS AG.

"Datang's first-half results are likely to surprise the market on the upside in our view," said Alice Hui, a Hong Kong-based analyst with UBS Securities Asia Ltd. The company reports earnings Monday.

Demand for electricity in China surged as the economy expanded 9.7 percent in the first half, causing blackouts in the nation's biggest cities and forcing temporary shutdowns at factories run by General Motors Corp, Volkswagen AG and other companies. Coal prices surged amid competition from China's power stations.

Datang increased power generation 38 percent to 25.12 million megawatt-hours in the first half as it expanded capacity and responded to strong demand.

The company's fuel costs increased by about 5 percent in the first half, analysts estimate. Datang probably did better at controlling costs than Huaneng Power International Inc (華能國際電力) and Huadian Power International Corp (華電國際電力) because many of its power plants are near mines providing cheap coal, which helped ease transport costs and shortages caused by bottlenecks, they said.

Huadian said earlier this week its fuel costs per kilowatt-hour generated rose 13 percent in the first half of the year. Huaneng's costs climbed twice as fast.

Power hungry

* Net income at the Beijing-based company probably climbed to 1.03 billion yuan in the first six months of the year

* Profit estimates ranged from 883 million yuan at Goldman, Sachs & Co and 1.08 billion yuan at UBS AG

* Datang increased power generation 38 percent in the first half of the year as it expanded capacity and responded to strong demand


Datang's shares are up 3.6 percent this year, compared with an 18 percent decline in the Hang Seng China Enterprises Index, the benchmark for so called H shares. Huaneng has lost 17 percent while Huadian has fallen 32 percent.

Three of Datang's biggest power plants are near coal mines in China's northern provinces of Shanxi and Inner Mongolia, said David Yip, an analyst with Merrill Lynch & Co in Hong Kong.

Together, these three plants represent 40 percent of the company's generating capacity.

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