Will CLP continue to expand out of Hong Kong?
CLP Holdings, Hong Kong's biggest power supplier, said 2007 profit rose 7.2 percent as contributions from Australia and Southeast Asia boosted earnings.
Net income climbed to HK$10.6 billion ($1.36 billion), or HK$4.4 a share, from HK$9.9 billion, or HK$4.11, a year earlier, CLP said in a statement to the Hong Kong stock exchange. That was lower than the median estimate of HK$11.2 billion in a Bloomberg survey of five analysts.
CLP has expanded abroad to counter slowing profit growth in Hong Kong, where the utility's permitted return on investment will be cut starting October. Sales rose 11 percent to HK$50.8 billion, helped by gains in India, Southeast Asia and Australia. Earnings at Melbourne-based unit TRUEnergy jumped 61 percent.
“The focus of growth for CLP going forward is Southeast Asia,” Nomura Securities analysts Rohan Dalziell and Ricky Ng said in a research note. “At the same time, CLP will continue to build its portfolio in India and China on a selective basis.”
CLP sold 29,962 gigawatt-hours of electricity in Hong Kong last year, with revenue from this business increasing 1.3 percent to HK$29.7 billion. Sales, including those to the Chinese mainland, fell 0.3 percent to 33,997 gigawatt-hours.
Capital expenditure in Hong Kong rose 7.9 percent to HK$6.12 billion last year, Chief Financial Officer Peter Tse told reporters in Hong Kong.
"Notwithstanding Hong Kong's strong economic fundamentals, electricity demand growth is expected to remain at moderate levels," the company said in the statement. CLP has been growing overseas because of "the slowdown in growth in electricity demand in Hong Kong,” which accounted for 72 percent of total 2007 earnings.
In Australia, earnings from TRUenergy increased to HK$307 million. CLP made a one-time gain of HK$767 million from swapping assets with AGL Energy, Australia's biggest power and gas retailer, it said. CLP acquired the Hallett power station and sold the Torrens Island power station.
CLP will "pursue growth opportunities" in New South Wales state through the energy asset privatization process, the company said.
Morris Iemma, premier of Australia's most-populous state, said the state will sell the retail licenses of Energy Australia, Integral Energy and Country Energy, while generators Macquarie Generation, Delta Electricity and Eraring Energy will be offered through long-term leases. Labor unions are seeking to stop the move, which JPMorgan Chase & Co. estimates may raise as much as A$16.4 billion ($15.4 billion).
The power producer also booked a gain of HK$1 billion from the sale of its 40 percent stake in Taiwan's Ho-Ping power station to OneEnergy. OneEnergy, jointly owned by Mitsubishi and CLP, was set up in 2006 to gain from power demand in Taiwan and Southeast Asia.
Earnings from CLP's business in China were cut by HK$150 million last year because of higher coal costs and government controls on power prices, Tse said. The company's power plants in China paid 10 to 11 percent more for coal last year, Chief Executive Officer Andrew Brandler said.
CLP, which has a joint venture with China Shenhua Energy, said five power plants will be injected into the joint venture by Shenhua and CLP's stake will be reduced to 30 percent from 49 percent. The company may seek a separate listing for the venture in future, Brandler said.
CLP and smaller rival Hongkong Electric Holdings reached an agreement with the city government on Jan. 7 to cut their permitted rate of return on investments to 9.99 percent from the current 13.5 to 15 percent. The new system will factor in the power producers' performances in meeting emissions reduction targets. The arrangement is "fair and balanced," Brandler said.
CLP, which uses natural gas to produce 25 percent of its power, proposes building the city's first receiving terminal for cleaner-burning liquefied natural gas. CLP aims to acquire the site and complete the approvals it needs for the $1.2 billion plant this year, it said.
CLP said it will increase power prices for the first time in 10 years, charging users 4.5 percent more starting January 1. Hongkong Electric raised prices by 6 percent.
Hong Kong will inject HK$1,800 into every residential electricity account in the city to ease the impact of rising power costs on low-income households, Financial Secretary John Tsang said in his annual budget speech.
What else will CLP do in order to sustain growth?
Net income climbed to HK$10.6 billion ($1.36 billion), or HK$4.4 a share, from HK$9.9 billion, or HK$4.11, a year earlier, CLP said in a statement to the Hong Kong stock exchange. That was lower than the median estimate of HK$11.2 billion in a Bloomberg survey of five analysts.
CLP has expanded abroad to counter slowing profit growth in Hong Kong, where the utility's permitted return on investment will be cut starting October. Sales rose 11 percent to HK$50.8 billion, helped by gains in India, Southeast Asia and Australia. Earnings at Melbourne-based unit TRUEnergy jumped 61 percent.
“The focus of growth for CLP going forward is Southeast Asia,” Nomura Securities analysts Rohan Dalziell and Ricky Ng said in a research note. “At the same time, CLP will continue to build its portfolio in India and China on a selective basis.”
CLP sold 29,962 gigawatt-hours of electricity in Hong Kong last year, with revenue from this business increasing 1.3 percent to HK$29.7 billion. Sales, including those to the Chinese mainland, fell 0.3 percent to 33,997 gigawatt-hours.
Capital expenditure in Hong Kong rose 7.9 percent to HK$6.12 billion last year, Chief Financial Officer Peter Tse told reporters in Hong Kong.
"Notwithstanding Hong Kong's strong economic fundamentals, electricity demand growth is expected to remain at moderate levels," the company said in the statement. CLP has been growing overseas because of "the slowdown in growth in electricity demand in Hong Kong,” which accounted for 72 percent of total 2007 earnings.
In Australia, earnings from TRUenergy increased to HK$307 million. CLP made a one-time gain of HK$767 million from swapping assets with AGL Energy, Australia's biggest power and gas retailer, it said. CLP acquired the Hallett power station and sold the Torrens Island power station.
CLP will "pursue growth opportunities" in New South Wales state through the energy asset privatization process, the company said.
Morris Iemma, premier of Australia's most-populous state, said the state will sell the retail licenses of Energy Australia, Integral Energy and Country Energy, while generators Macquarie Generation, Delta Electricity and Eraring Energy will be offered through long-term leases. Labor unions are seeking to stop the move, which JPMorgan Chase & Co. estimates may raise as much as A$16.4 billion ($15.4 billion).
The power producer also booked a gain of HK$1 billion from the sale of its 40 percent stake in Taiwan's Ho-Ping power station to OneEnergy. OneEnergy, jointly owned by Mitsubishi and CLP, was set up in 2006 to gain from power demand in Taiwan and Southeast Asia.
Earnings from CLP's business in China were cut by HK$150 million last year because of higher coal costs and government controls on power prices, Tse said. The company's power plants in China paid 10 to 11 percent more for coal last year, Chief Executive Officer Andrew Brandler said.
CLP, which has a joint venture with China Shenhua Energy, said five power plants will be injected into the joint venture by Shenhua and CLP's stake will be reduced to 30 percent from 49 percent. The company may seek a separate listing for the venture in future, Brandler said.
CLP and smaller rival Hongkong Electric Holdings reached an agreement with the city government on Jan. 7 to cut their permitted rate of return on investments to 9.99 percent from the current 13.5 to 15 percent. The new system will factor in the power producers' performances in meeting emissions reduction targets. The arrangement is "fair and balanced," Brandler said.
CLP, which uses natural gas to produce 25 percent of its power, proposes building the city's first receiving terminal for cleaner-burning liquefied natural gas. CLP aims to acquire the site and complete the approvals it needs for the $1.2 billion plant this year, it said.
CLP said it will increase power prices for the first time in 10 years, charging users 4.5 percent more starting January 1. Hongkong Electric raised prices by 6 percent.
Hong Kong will inject HK$1,800 into every residential electricity account in the city to ease the impact of rising power costs on low-income households, Financial Secretary John Tsang said in his annual budget speech.
What else will CLP do in order to sustain growth?
posted by Charltonmedia.com @ 6:10 PM
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