China's Electricity Plans Fail To Fuel Gains for Power Firms
Beijing's plan to formally link electricity tariffs to coal prices should help offset power producers' rising costs, but it won't resolve broader problems facing the overloaded sector.
Throughout 2003 and early this year, investors eagerly bought China's independent power producers, or IPPs. But in April, as the price of coal -- the producers' biggest cost -- kept soaring, shares of most IPPs began falling from peaks. News that the Chinese government will help alleviate the coal-price pressure under new regulations has cheered some investors, but it hasn't sparked share gains for the publicly traded IPPs.
Even under the proposed system, electricity prices won't match outlays, so the power producers likely will still feel squeezed. Then there are other issues making investors wary of IPPs: looming overcapacity, high debt levels and less-than-grabby stock valuations.
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"The regulatory and the policy-related uncertainty seem far too high for us, on top of increasing input prices -- coal, in this case," says Bratin Sanyal, head of equities at ING Asset Management in Hong Kong. The fund manager owns shares in some IPPs but is underweight the sector compared with its weighting in the benchmark MSCI All Country Asia ex-Japan index.
IPPs in China, which has the world's fastest-growing power sector, have been squeezed financially by the ballooning price of coal, which accounts for about 70% of many power plants' operating cost. While state-controlled IPPs buy most of their fuel through negotiated contracts with domestic coal producers, they also purchase coal on international markets, where prices are significantly higher, and increases in electricity tariffs in January and June didn't fully cover the upswing in expenditures. Under the proposed regulations -- which call for rate changes twice a year if coal prices rise or fall 5% during the prior six-month period -- IPPs could pass on 70% of that cost or gain. They will remain exposed to the remaining 30%.
That situation makes it critical to pick stocks in companies that have strict cost controls, say analysts. Huaneng Power International appears to be having a particularly tough time. In its third-quarter results, Huaneng said higher coal prices depressed the company's profit 18% despite a rise in revenue. It also is exposed to expensive transportation costs -- aggravated by recent domestic rail and sea transport bottlenecks -- because its plants are "thousands of miles away from its mines," says Joseph Jacobelli, head of Asia Pacific utilities research at Merrill Lynch in Hong Kong. He has a neutral rating on Huaneng, whose share price has fallen 30% since its 2004 high in April.
Mr. Jacobelli also warns investors against companies with high debt levels because of big expansion plans. Take Huadian Power International, which aims to roughly double its capacity in the next four years. According to Merrill Lynch's calculations, Huadian, which had a 96% ratio of net debt to equity at the end of 2003, saw that figure rise to 120% by June 30. "That's going to keep on going up," Mr. Jacobelli says.
Not all IPPs are getting badly squeezed. In a recent report, UBS analyst Alice Hui lauded Datang International Power Generation's ability to "keep its fuel costs under control" by sourcing cheap coal from Inner Mongolia and maintaining a "good relationship" with its major coal supplier. She also cites the company as a "beneficiary" of China's new tariff policy and the 2008 Olympic Games in Beijing, one of Datang's primary markets. Ms. Hui has China Yangtze Power as her top pick, partly because it has "no fuel cost."
China Yangtze Power is the listing vehicle for the Three Gorges Dam, the world's largest hydropower project.
The newest addition to China's listed IPP sector, China Power International Development, faces many of the same challenges as its peers, say analysts. Though its generating capacity is relatively small, its initial public offering last month still was a big success. "China Power was cheap when it IPOed. [The underwriters] priced it at 10% to 15% discount to the existing IPPs," says Yang Liu, fund manager for Atlantis Investment Management in Hong Kong. "It's a long-term hold." (See related article.)
In the longer run, market observers worry that IPPs are adding too much capacity at a time when Beijing is trying to slow economic growth. Last month, China raised interest rates 0.27 percentage point, the first such move in nine years, to help contain economic growth averaging about 9% a year.
"It's a classic boom-and-bust cycle from a macro perspective," says Rohan Dalziell, head of Asian utilities research at Macquarie Securities in Hong Kong. "They had too little capacity. Prices, demand went up, and the supply response wasn't managed appropriately."
Despite the pressures on IPPs, many analysts complain their shares remain expensive. Brokers say Datang, Huaneng and Huadian all trade at about 12.5 times or more next year's prospective earnings. Some popular China plays have price/earnings ratios of about 10.
中国发电公司未见光明
中国政府计划正式将电价与煤炭价格挂钩将有助于抵消发电厂成本的不断上升，但这不会解决不堪重负的发电企业面临的深层次问题。
从2003年初到2004年年初，投资者曾大肆买进中国的独立发电厂(IPP)类股。但4月份时，随著煤炭价格持续上涨，大多数IPP类股开始见顶回落。煤炭是发电厂最大的一项成本，约占其运营成本的70%左右。虽然有消息说，中国政府将出台新规定以缓解发电厂承受的煤炭价格上涨压力，这令部分投资者感到欣慰，但上市IPP类股的价格并未因此而上扬。
即便实施这一拟议中的煤、电价格挂钩制度，电价也无法抵消支出，因此发电厂的日子仍不好过。还有其他问题使投资者对IPP类股持谨慎态度：产能可能过剩、负债累累以及股票估价偏高。
ING Asset Management驻香港的证券部主管布拉廷?桑亚尔(Bratin Sanyal)说，除了煤炭这一生产原料的价格上涨之外，与监管及政策相关的不确定性看来也非常大。这位基金经理持有部分IPP类股，但相对于这类股票在MSCI所有亚洲国家（不包括日本）指数中的权重，他对IPP类股持减持态度。
由于煤炭价格的飙升，中国IPP的利润一直受到了挤压。尽管国家控股的IPP是通过与国内煤炭生产商签署协议购买大多数煤炭的，但它们也会从价格更高的国际市场上购买煤炭，1月和6月份两次上调电价并未完全抵消成本的上涨。根据拟议中的规定，如果煤炭价格在6个月的时间内涨跌幅度超过5%，就可调整电价，因而每年有可能调整两次电价，这样IPP能将70%的成本或所得转移出去。但它们仍将承受其余的30%。
分析师们因而称，挑选那些能严格控制成本的公司进行股票投资就变得尤为重要。华能国际电力股份有限公司(Huaneng Power International Inc., 0902.HK, 简称：华能国际)目前的处境似乎最为艰难。该公司在公布第三财季业绩时称，尽管收入增长，但煤炭价格的上涨使其利润下降了18%。近期国内铁路及海运瓶颈问题日益严重也使其运输成本不断上升。美林(Merrill Lynch)驻香港的亚太区公用事业研究部负责人约瑟夫?雅格贝利(Joseph Jacobelli)说，这主要是由于该公司的发电厂与其购买煤炭的煤矿相隔千里之遥。他对华能国际股票的评级为中性，该股已经从4月份创出的年内高点下跌了30%。
雅格贝利还提醒投资者注意因庞大的扩张计划而负债累累的公司。以华电国际电力股份有限公司(Huadian Power International Corp. Ltd., 1071.HK, 简称：华电国际电力股份)为例，该公司计划在今后4年中将其产能扩大约一倍。根据美林的计算，华电国际电力股份在2003年年底的净债务与股东权益比率为96%，而到今年6月30日时，已经上升到了120%。雅格贝利称，这一比率还将继续上升。
并非所有的IPP都处境艰难。瑞银(UBS)分析师Alice Hui就在最近的报告中盛赞了大唐国际发电股份有限公司(Datang International Power Generation Co. Ltd., 0991.HK, 简称：大唐发电)，该公司通过从内蒙古采购低价煤及维持与主要煤炭供应商的良好关系而充分控制了燃料成本。她还称该公司将从中国新的电价政策和2008年北京奥运会中获益。北京是大唐发电的一个主要市场。Alice Hui将中国长江电力股份有限公司(China Yangtze Power Co. Ltd., 600900.SH, 简称：长江电力)作为她的首选，原因之一就是该公司没有燃料成本。
长江电力是世界上最大的水电项目三峡工程的上市企业。
分析师称，最新上市的中国电力国际发展有限公司(China Power International Development Ltd., 2380.HK, 简称：中国电力)也与其同行一样面临同样的挑战。尽管其发电能力较小，但该公司上个月的首次公开募股仍大获成功。香港西京投资管理公司(Atlantis Investment Management)的基金经理刘央说，中国电力的募股价较低，承销商的定价比目前IPP的股价低了10%-15%。该股值得长期持有。
从长期来看，市场观察人士担心IPP当前存在产能过度扩张之虞，因为中国政府正试图给过热的经济降温。上个月，中国将利率上调了0.27个百分点，以便把经济增长率控制在9%左右。这是9年来的首次加息。
麦格理证券(Macquarie Securities)驻香港的亚洲公用事业研究主管罗汉?达尔齐尔(Rohan Dalziell)说，从宏观角度看，这是典型的盛衰周期。过去是产能太低，价格和需求因而增加，而供应问题却未相应得到妥善把握。
尽管IPP面临压力，但多数分析师都抱怨这些公司的股价依然偏高。经纪商称，大唐发电、华能国际和华电国际电力股份的股价均为其2005年预期收益的12.5倍左右。而部分中国知名企业的本益比均在10倍左右。
