Asian Utility Strategy
Fuel Cost Pass-through to Drive Outperformance
 Tariff hikes not enough to offset rising fuel costs — We expect 2008E OP and NP
margins of Asian utilities to contract 2ppts yoy to 18.8% and 3ppts yoy to 15.5%
due to rising fuel costs but limited tariff hikes amid high inflation. Companies that
can pass on higher fuel costs will outperform, in our view. Our top picks in the
Asian utilities sector for 2H08 are CKI, Xinao, Glow, NTPC and GAIL.
 Hong Kong — We add CKI to our top buys for its defensive earnings, low P/E vs.
peers and sub-10% gearing that provides scope for EPS-accretive M&A.
 China — Resilient gas sales margins and a high net profit CAGR of 26% in 2008E-
10E make Xinao attractive. The impact of the property market slowdown in China
appears limited. We remove China IPPs Huaneng and CRP from our top buys list,
believing that their stock prices have already priced in possible tariff hikes.
 Thailand — We like Glow. Its capacity will jump nearly 50% in 2008-12E and
demand from its petrochem customers remains strong. The recent environmental
approval for its 660MW coal-fired IPP won last year has lifted an overhang.
 India — We add defensive plays NTPC and GAIL to our top picks list. These stocks
have respectively declined 32% and 28% over the past six months.
 Top Sells — Huaneng and Huadian are on our top sells list for valuation reasons.
In the power-equipment sector we prefer Harbin Power to Shanghai Electric,
which is more expensive and exposed to A-share investment risks.

目录

2H08 Outlook for Asian Utilities 3
China’s Power Sector 13
Chinese Power Equipment Sector 25
Chinese Gas Sector 29
Chinese Wastewater Sector 33
Hong Kong Power Sector 36
India Gas Sector 39
Indian Power Sector 43
Thai Power Sector 48
Companies 55

Banpu (BANP.BK) 56
CESC (CESC.BO) 59
Cheung Kong Infrastructure Holdings (1038.HK) 63
CLP Holdings (0002.HK) 76
China Power International (2380.HK) 87
China Resources Power (0836.HK) 100
Datang International Power Generation (0991.HK) 113
Dongfang Electric Corporation (1072.HK) 127
Epure International (EPIL.SI) 138
GAIL (GAIL.BO) 144
Glow Energy (GLOW.BK) 147
Gujarat Gas (GGAS.BO) 150
Gujarat State Petronet (GSPT.BO) 156
Harbin Power Equipment (1133.HK) 159
Hong Kong & China Gas (0003.HK) 169
Hongkong Electric (0006.HK) 179
Huadian Power International (1071.HK) 189
Huaneng Power International (0902.HK) 203
Indraprastha Gas (IGAS.BO) 215
KEPCO (015760.KS) 218
NTPC (NTPC.BO) 231
Ratchaburi Electricity Generating (RATC.BK) 236
Reliance Infrastructure (RLIN.BO) 239
Shanghai Electric Group (2727.HK) 244
Tata Power (TTPW.BO) 256
Xinao Gas Holdings (2688.HK) 260
Appendix A-1 273