Table of Contents
China IPP valuation table.................................................................. 3
Investment thesis .............................................................................. 5
Outlook ....................................................................................................................................5
Valuation ..................................................................................................................................5
Risks ........................................................................................................................................5
A 10% yoy coal price rise looks set.................................................. 6
Another year of further fuel cost pressure ................................................................................6
Tariff hike will come through ........................................................... 8
A big shortfall since 2003..........................................................................................................8
Further delay, but likely in 2H 2008...........................................................................................9
Alarming fuel supply .................................................................................................................9
Gridcos to share the upstream cost pressure...........................................................................9
Tariff hike – worst/best scenarios ...........................................................................................11
Supply and demand outlook .......................................................... 12
2007 review ............................................................................................................................12
New demand and supply forecasts ........................................................................................13
New rules to benefit national IPPs..........................................................................................17
Asset injection continues................................................................ 19
A benign environment for asset injection ...............................................................................19
Asset injection outlook............................................................................................................20
Appendix A: China IPPs in charts ................................................... 21
Appendix B: List of approved projects .......................................... 25
Appendix C: Power sector guidelines............................................ 27
Datang Int'l Power........................................................................... 28
Assumption/earnings/TP change.............................................................................................30
Overview of coal mine investment .........................................................................................31
Overview of propylene investment.........................................................................................32
Key operating assumptions.....................................................................................................33
China Power Int'l ............................................................................. 34
Assumption/Earnings/TP changes...........................................................................................36
What are the possible options? ..............................................................................................37
Key operating assumptions.....................................................................................................38
Huadian Power ................................................................................ 40
Assumption/Earnings/TP changes...........................................................................................42
NPV upside from a hypothetical acquisition scenario .............................................................43
Key operating assumptions.....................................................................................................44
Huaneng Power Intl......................................................................... 46
Assumption/Earnings/TP changes...........................................................................................48
Parent asset injection resumes...............................................................................................49
Key operating assumptions.....................................................................................................50
CR Power.......................................................................................... 52
Assumption/Earnings/TP changes...........................................................................................54
Medium-term downside from higher tax rate .........................................................................55
Key operating assumptions.....................................................................................................56