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Huadian Power International Corp Ltd, the largest listed subsidiary of China Huadian Group Corp, plans to further expand its presence in China - beyond its original stronghold in east China's Shandong Province.
Zhong Tonglin, vice-president of Huadian Power International Corp, unveiled the development strategy yesterday at a press conference to announce that the company would reveal its first A-share price today.
The power company launched its A-share IPO (initial public offering) on January 17.
Huadian Power International has 12 subsidiary power generation companies, with operations in east China's Shandong and Anhui provinces, southwestern Sichuan Province, and northwestern Ningxia Hui Autonomous Region, said company sources.
By the end of 2004, the Shandong-based power company could boast an installed power capacity of 8,580 megawatts, with 86 percent of that concentrated in Shandong Province.
The company plans to expand this capacity to 16,040 megawatts by 2008.
Currently, power plants with capacities of 1,260 megawatts are under construction in Anhui Province and Ningxia Hui Autonomous Region.
Zhong also hinted at potential plans to acquire existing power plants across the country, but did not give any details.
The A-share listing of the company will further widen its financing channels, which is conducive to its business expansion plans, said Wang Xiaohui, an industry analyst with CITIC Securities.
Whether the subsidiary will gain full support from China Huadian Corp, however, remains to be seen, Wang added, as it is hard to predict whether Huadian Corp will list in its entirety.
Besides expansion into more regions of China, the Shandong-based company also plans to diversify its industrial structure by developing hydroelectric, wind power and fuel gas projects - while keeping thermal power generation as its core business, said vice-president Zhong Tonglin.
The company, already listed in Hong Kong, plans to issue 765 million A shares, a move which will end the five month IPO drought on the mainland market.
Listing on the Shanghai Stock Exchange, Zhong said, will also improve the company's capital structure.
Currently the company's liability ratio stands at 60 percent, and after the A-share listing, the figure is expected to drop to approximately 55 percent, according to Zhong.
China Huadian Corp - one of China's five power conglomerates - has a 53.56 percent stake in the power company that was established in Shandong in 1994.
This stake will drop slightly to 50.01 percent after the listing, company sources said.
(China Daily January 20, 2005)
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