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雷达卡
UBS Investment Research
Chinese Independent Power Producers
Downgrade sector stance to Neutral
We lower our 2009 power demand growth forecast to -1.2%
We are turning from positive to neutral on the Chinese IPPs. We expect weakness in
China’s power demand to persist in the near term. We lower our 2009 demand
forecast from +5.4% to -1.2%. We derive our demand forecast from the historical
monthly trends in 1996-2008 applied to a base using January-February 2009 power
output, which declined approximately 4% YoY. We expect power demand to begin
picking up more meaningfully in H209, partly driven by the government’s stimulus
package. Even if we used just the strong-demand years (since 2005) as a base, we
would only expect 1.3% demand growth in 2009.
Utilisation rates likely to decline, despite slower new capacity addition
We also lower our forecast for 2009 net capacity addition from 60GW to 40GW, or
5% YoY growth, to reflect slowing government approvals and the IPPs’
constrained capex. Effectively, we expect the national power plant utilisation rate
to fall 4.2ppt YoY in 2009, compared with our previous forecast of only a 1.6ppt
decline. Nonetheless, our new power demand assumption, 6.6ppt weaker than we
originally expected, together with the broader implications for other parts of the
economy, suggest almost 70m tonnes less demand for coal nationwide than 2008.
Downgrade rating on Huaneng-H to Neutral; CR Power still our top pick
UBS’s mining research team maintains its coal price forecasts. After reflecting the
lower power plant utilisation rate forecasts and the IPPs’ actual power generation
in 2008, we are lowering our 2009 earnings estimates and DCF-based price targets
in most cases. We downgrade our rating for Huaneng Power International H
(Huaneng-H) from Buy to Neutral after significant share price outperformance.
Our top pick is China Resources Power (CR Power), which we believe is best
positioned for long-term growth with its premium return profile.
Contents page
Summary and investment case 3
— Earnings estimate and price target cuts .................................................................3
— Our sector top pick is China Resources Power......................................................4
Utilisation rate downside in 2009E 5
— Deriving 2009E power demand growth at -1.2%....................................................5
— Is our estimate too pessimistic? .............................................................................7
— New capacity additions likely lower ........................................................................9
Sensitivity of earnings 10
Valuation 11
Company pages 17
— China Resources Power.......................................................................................18
— Huaneng Power International ...............................................................................20
— Huaneng Power International - A .........................................................................22
— Datang International Power..................................................................................24
— Datang International Power - A ............................................................................26
— Huadian Power International ................................................................................28
— Huadian Power International - A ..........................................................................30
— China Power Intl ...................................................................................................32
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