Bloomberg News

Chinese Power Stocks Surge on Profits, Price Discount

August 21, 2007

Chinese power producers rose in Hong Kong trading as investors responded to profit gains and sought to take advantage of discounted prices on some of the stocks compared with mainland exchanges.

Datang International Power Generation Co. (991) rose as much as 20 percent to HK$6.52, the biggest intraday gain in more than seven years. China Resources (836) Power Holdings gained as much as 18 percent to HK$19.76, the most in almost four years. Huadian Power (1071) International Corp. surged as much as 24 percent to HK$3.98, the largest advance in eight years.

China's government said yesterday it will allow individuals on the mainland to buy stocks in Hong Kong. The move will enable investors to buy shares of companies with twin listings of so-called H-shares in the city and yuan denominated A-shares in Shanghai or Shenzhen at lower prices. China Resources Power said yesterday profit in the first six months jumped 41 percent because of expanded generating capacity.

Datang has ``the third largest A-H price gap at 78 percent based on yesterday's close,'' said Donovan Huang, a Hong Kong- based analyst at Nomura International Ltd. ``Huadian's gains are due to an attractive valuation and the potential upside from group listing. China Resources Power is supported by a strong interim result.''

Shanghai-listed shares of Datang Power closed at 24.37 yuan yesterday, compared with HK$5.45 in Hong Kong.

China Huadian Corp., parent of Huadian Power, said in March that it is considering selling shares to raise funds. The company is making internal adjustments to the group's operations for the listing, Chen Feihu, the group's deputy general manager said.

`Not Aware'

``We are not aware of any reasons for'' the share price increase, Huadian Power said in a statement to the Hong Kong stock exchange today after the market's close. ``The company is currently in discussion with independent third parties in respect of a possible formation of a joint venture company,'' it said, without giving details.

Chinese power producers are boosting generation to supply electricity to carmakers, factories and petrochemical plants in the world's fastest-growing major market. China's economy expanded 11.9 percent in the second quarter of this year, the fastest pace in 12 years.

Datang Power shares rose to HK$6.17 by the market's 4 p.m. close. Shares of Huadian rose to HK$3.52 and those of China Resources Power rose to HK$18.2 before the market closed.

To contact the reporter on this story: Ying Lou in Hong Kong at ylou1@bloomberg.net.

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.


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