23 January 2009
Asian Power/Utilities
Meter Reading January
Michael Tong, CFA
Research Analyst
(852) 2203 6167
michael.tong@db.com
Eric Cheng, CFA
Research Analyst
(852) 2203 6202
eric-ct.cheng@db.com
DB Asia Utility Meter Reading January
The DB Asia Utility Monthly tracks key metrics including fuel price, freight, Forex,
treasury yield, and power demand growth across the region, reviews all of the
local newsflow, summarises all of the recent sector research from Deutsche Bank
and contains detailed share price performance and sector comps.
Deutsche Bank AG/Hong Kong
All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local
exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche
Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm
may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision. Independent, third-party research (IR) on certain companies covered by DBSI's research
is available to customers of DBSI in the United States at no cost. Customers can access IR at
http://gm.db.com/IndependentResearch or by calling 1-877-208-6300. DISCLOSURES AND ANALYST CERTIFICATIONS ARE
LOCATED IN APPENDIX 1.
Industry Update
Top picks
Beijing Enterprises (0392.HK),HKD29.50 Buy
Guangdong Investment (0270.HK),HKD3.06 Buy
PGN (PGAS.JK),IDR2,030.00 Buy
Aboitiz Power (AP.PS),PHP4.05 Buy
Huadian Power (1071.HK),HKD1.53 Buy
Global Markets Research Company
Monthly focus: tariff policy change in India
The key development across the regional utility space is the announcement of a
new tariff computation policy for 2010-14 in India. The new structure suggests
some relaxation of the government’s formerly hard stance on cutting tariffs and
RoEs for gencos, with the removal of a few anomalies in tariff computation.
New features: tracking commodity, freights, currencies and treasure yields
Starting this month, we charted the prices of fuel commodities, including oil, coal,
and gas and international sea freights, which are key earnings drivers for Kepco,
Tenaga and the China IPPs. We also tracked major changes in currency such as
the AU$/JPY/GBP/WON/ringgit/baht/rupee that affect imported fuel costs,
overseas business contribution, and any gain/loss from foreign currencydenominated
debts. After sharp depreciation vs. US$ (except JPY) since Sep’08,
most currencies have stabilized in the past month. We have also monitored
treasury yield movements, which historically have a strong correlation with yieldoriented
utility names.
Recent DB sector research
We reiterated Buy on Guangdong Investment following the finalization of the raw
water supply contract with the Hong Kong government and a higher-than-expected
subsidy from the Guangdong government. We also reiterated Buy on PGN after
management addressed concerns of gas pricing and 2009 volumes. We cut our
earnings estimates for Tata Power 27% for FY09 and 43% for FY10 following the
sharp downgrade of PT Bumi’s earnings. We maintain Hold on Tenaga following
its loss-making 1Q results and lower power volume guidance for FY09.
News from the local press
Key news over the past month includes: a deadlock in the contract coal price
negotiation and the IPPs’ profit warning in China; the HKE’s tariff cut in Hong
Kong; the Indian government’s announcement of a stimulus package and tariff
policy change; Tenaga’s whopping loss in 1Q in Malaysia; the rejection of a Manila
water rate hike in the Philippines; and IPPs’ project delays in Thailand.
Share price movement and valuations
Absolute performances in the Power/Utilities space were negative for most stocks
due to overall market retreat following a strong rally in November-December.
However, most stocks have outperformed their respective market indices given
their defensiveness in general. CLP, HKE, GDI, BJE and HKG in particular are top
outperformers, while MWC is the worst performer due to rejection of a rate hike
that resulted in a 22% slide in the stock in two days. We use a discounted cash
flow model to value most of the Asian Power/Utilities stocks. Key risks related to
regulation, commodity price volatility, GDP growth rates and currency movements.

Table of Contents
Focus: Tariff change in India............................................................. 4
Summary:.................................................................................................................................4
Two-part tariff structure to remain intact with a few changes ..................................................4
Positives largely from higher RoE and depreciation rates.........................................................5
Negatives largely from AAD removal and taxes levied on Gencos ...........................................5
Commodity & Freight Prices ............................................................ 7
Currency Exchange............................................................................ 8
Monthly electricity demand ........................................................... 10
10 Year Gov’t Bond Yields .............................................................. 11
Upcoming Events ............................................................................ 12
DB research ...................................................................................... 13
Recent newsflow ............................................................................. 25
Share price performance and sector comps ................................. 34