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1、Buy,Buy,Buy,Deutsche BankMarkets Research,AsiaChinaUtilities,PeriodicalUtility/AlternativeEnergy,Date8 January 2013Michael Tong,CFA,Eric Cheng,CFA,China Wind Developers-The worst is,Research Analyst(+852)2203 6167,Research Analyst(+852)2203 6202,behind us;industry tailwinds aheadRecent published rep
2、ortsChina Wind Developers-The worst is behind us;industry tailwinds ahead2013 will be a better year due to several re-rating catalystsAfter underperforming the HSCEI Index by 30%in 2012 due to a rapid declinein carbon price and persistent grid curtailment problems,China winddevelopers share prices a
3、re now trading at the low end of their historicalvaluation bands and well below replacement cost.We see valuations as veryattractive at current depressed levels given industry fundamentals will improveon both near-and medium-term catalysts.We maintain Buy on all winddevelopers;Longyuan is top pick w
4、ith our target price implying c.25%upside.Sector news,eric-Kai-Ting Wong,CFAResearch Analyst(+852)2203 6235kai-Companies FeaturedBeijing Enterprises(0392.HK),HKD51.00 Buy2011A 2012E 2013EP/E(x)19.75 18.84 14.59EV/EBITDA(x)10.6 12.0 10.2Price/book(x)1.4 1.5 1.4China Resources Power Buy(0836.HK),HKD19
5、.34,Cold weather brings sharp rise in power generation and digest of high coalinventoryAccording to data from State Electricity Regulatory Commission(SERC),on 5January 2013,Chinas daily power generation exceeded 15bn kWh,reaching,P/E(x)EV/EBITDA(x)Price/book(x),2011A 2012E 2013E18.36 14.27 10.518.9
6、9.1 7.11.3 1.6 1.4,the historical record in December 2012.Cold weather has supported therecovery of power consumption since September 2012.Meanwhile,daily coal,Longyuan Power(0916.HK),HKD5.852011A 2012E 2013E,consumption is also increasing.According to,daily coalconsumption of Shanghai Power increas
7、ed 34%to 51,000 tons on 5 Januaryfrom 38,000 tons on 3 January.In addition,an internal source told the,P/E(x)EV/EBITDA(x)Price/book(x),16.510.91.5,13.39.11.1,12.88.51.1,journalist that the latest Bohai-rim coal price will keep flat or experience aslight decline.,Dongfang Electric(1072.HK),HKD17.00 B
8、uy2011A 2012E 2013E,Power output of Three Gorges Hydropower Station reached 98bn kWh in 2012According to the latest data,as of 31 December 2012,power output of theThree Gorges Hydropower Station for 2012 reached 98bn kWh,hitting the,P/E(x)EV/EBITDA(x)Price/book(x),14.88.02.8,10.13.71.7,9.42.61.5,his
9、torical peak since it commenced operation.China PE investment in clean energy hit a record low in 2012,Huaneng Power Intl(0902.HK),HKD7.152011A 2012E 2013E,Chongqing approves four biomass projects,P/E(x)EV/EBITDA(x),39.59 12.679.7 8.1,8.026.2,MOF announces third batch of qualified renewable tariff p
10、remium recipientproject,Price/book(x)BEWG(0371.HK),HKD2.04,0.9,1.4,1.3Buy,Company news,2011A 2012E 2013E,Longyuan wind power output 26%in 2012Longyuan said yesterday that its power output in December 2012 increased25.6%to 2.94bn kWh,with wind output+35%yoy,coal power+11%yoy and,P/E(x)EV/EBITDA(x)Pri
11、ce/book(x),24.79 16.23 12.7420.9 14.5 13.71.8 1.6 1.5,other renewable+217%.In 2012,total power output was up 13.3%,with windoutput up 26%,coal output-4.4%and other renewable+246%.,Datang Renewable(1798.HK),HKD1.092011A 2012E 2013E,P/E(x),12.74 51.34 16.44,EV/EBITDA(x)Price/book(x),10.20.9,10.50.7,9.
12、60.7,_Deutsche Bank AG/Hong KongDeutsche Bank does and seeks to do business with companies covered in its research reports.Thus,investors shouldbe aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors shouldconsider this report as only a singl
13、e factor in making their investment decision.DISCLOSURES AND ANALYSTCERTIFICATIONS ARE LOCATED IN APPENDIX 1.MICA(P)072/04/2012.,8 January 2013UtilitiesUtility/Alternative EnergySector newsCold weather brings sharp rise in power generation and digest of high coal inventory(Shanghai Securities News)A
14、ccording to data from the State Electricity Regulatory Commission(SERC),on 5January 2013,Chinas daily power generation exceeded 15bn kWh,reaching ahistorical high in December 2012.Cold weather has supported the recovery of powerconsumption since September 2012.In the meantime,daily coal consumption
15、has alsoincreased.According to,daily coal consumption of Shanghai Powerincreased 34%to 51,000 tons on 5 January from 38,000 tons on 3 January.In addition,an internal source told the journalist that the latest Bohai-rim coal price will keep flat orexperience a slight decline.Power output of Three Gor
16、ges Hydropower Station reached 98bn kWh in 2012(C)According to the latest data,as of 31 December 2012,the power output of the ThreeGorges Hydropower Station for 2012 reached 98bn kWh,hitting the historical peaksince it commenced operation.China PE investment in clean energy hit a record low in 2012(
17、Xinhua)According to the latest report from ChinaVenture,PE investment in Chinas cleanenergy sector hit a record low in 2012 with a total financing amount of US$510m foronly eight cases,down 48.9%yoy,which is the lowest level in the past six years.As tothe capital market,only five companies achieved
18、IPO in 2012(all in the first half of 2012)with a total amount of US$998m,down 69%yoy.In addition,the average rate of returnof exit for PE/VC investment from Chinas clean energy IPOs was only 1.45x in 2012,hitting a record low in the past six years.Chongqing approves four biomass projects(Chongqing d
19、aily)Chongqing DRC announces that the National Energy Bureau has recently approved fourbiomass projects in the municipality,with a total capacity 114MW.MOF announces third batch of qualified renewable tariff premium recipient project(MOF website,China Securities Journal)The Ministry of Finance annou
20、nces on it website yesterday the third batch of renewableprojects that are qualified to receive the renewable tariff premium payment.The thirdbatch has 496projects,significantly more projects than the first at 220projects andsecond at 415 projects.Renewable projects needs to be approved by the MOF o
21、r NDRCbefore it can start to receive the tariff premium over the benchmark tariff.In the past,tariff premium has been delayed for more than one or two years.Company newsLongyuan wind power output 26%in 2012(Company announcement)Longyuan announced yesterday that its power output in December 2012 incr
22、eased25.6%to 2.94bn kWh,with wind output+35%yoy,coal power+11%yoy and otherrenewable+217%.In 2012,total power output was up 13.3%,with wind output up26%,coal output-4.4%and other renewable+246%.,Page 2,Deutsche Bank AG/Hong Kong,8 January 2013UtilitiesUtility/Alternative EnergyRecently published rep
23、orts,China Wind Developers-The worst is behind us;industry tailwinds ahead2013 will be a better year due to several re-rating catalystsAfter underperforming the HSCEI index by 30%in 2012 due to the rapid decline in thecarbon price and persistent grid curtailment problems,China wind developers sharep
24、rices are now trading at the low end of their historical valuation bands and well belowreplacement cost.We see valuations as very attractive at current depressed levels givenindustry fundamentals will improve on both near-and medium-term catalysts.Wemaintain Buy on all wind developers;Longyuan is to
25、p pick with our target priceimplying c.25%upside.Click/copy this link into a browser to access the report:http:/pull.db-Everbright Intl-CEIs biomass projects back on agenda;reiterating SellTicker:0257.HK,Closing Price:3.90 HKD,Target Price:3.00 HKD,Recommendation:SellExecution risks increasing on th
26、e restart of biomass projectsCEIs diversification into biomass projects again looks premature as the companyrecently said that these projects have been put on hold.We believe CEI will still have toexecute its pipeline biomass projects once they received NDRC approval.This is anegative given the lack
27、 of strong operational track record and industry-wide biomassprojects have been reporting losses.We reiterate Sell as current valuation of 12%FY13E ROE and 1.7x P/B has priced in perfect execution which seems overly optimistic.Click/copy this link into a browser to access the report:http:/pull.db-In
28、vestment Alert-GDI terminates property acquisitionTicker:0270.HK,Closing Price:6.13 HKD,Target Price:6.40 HKD,Recommendation:BuyGDI announced it will not proceed with the acquisition of 40%stake in the commercialproperties in Guangdong which the parent company acquired on 23 Nov 2011 througha public
29、 auction tender.The key reason for this is that the Department of Foreign Tradeand Economic Cooperation of Guangdong Province has disallowed the transfer ofshareholding in the property companies as the current PRC government has a strictcontrol on foreign investment in the PRC real estate sector.Gua
30、ngdong Teem,which isGDIs key property platform and a 76%subsidiary,is considered a foreign investedenterprise and thus its acquisition of the commercial properties from GDIs parentcorequires the PRC regulatory approvals for foreign investments which was subsequentlyrejected.GDIs parentco will refund
31、 the consideration and shareholders loan ofRmb2.15bn to Guangdong Teem in early Jan 2013.The shareholders loan hasgenerated interest income of Rmb148mn during the period.Click/copy this link into a browser to access the report:http:/pull.db-Bank AG/Hong Kong,Published by Kai-Ting Wongon 7-Jan-13Publ
32、ished by Kai-Ting Wongon 3-Jan-13Published by Kai-Ting Wongon31-Dec-12Page 3,8 January 2013UtilitiesUtility/Alternative Energy,Utilities Alert-China IPPs:a“Christmas gift”received from the governmentFuel cost tariff pass-through mechanism reintroducedOn Dec 25,State Council in China announced the“Gu
33、ideline of deepening the thermalcoal market reform”which states the reimplementation of“fuel cost tariff pass-throughmechanism”since it was lastly announced in 2004.key elements of the mechanisminclude 1)on-grid tariff adjustment will be trigged when coal prices change over 5%over an 12-month period
34、,2)90%of IPPs fuel cost change can be passed-throughthrough tariff adjustment(vs.70%previously stipulated).Although power tariff reformis not totally unexpected,we view the time of announcement is earlier than what wehave expected as of sometime in 2013.This is a key positive to the sector in terms
35、ofrectifying IPPs earnings vulnerability to coal price volatility,which bodes well for sectorvaluation multiple expansions.Meanwhile,we see the convergence of contract andspot coal supply as well-expected.Reiterate our Buy call on all the five HK-listed IPPs.Click/copy this link into a browser to ac
36、cess the report:http:/pull.db-,Published by Michael Tongon26-Dec-12,China Gas Holdings Alert-Fortune Oil deal looks positive.but such conclusion can be,Published,by,Eric,Cheng,prematureTicker:0384.HK,Closing Price:6.21 HKD,Target Price:4.40 HKD,Recommendation:HoldChina Gas to acquire Fortune Oils na
37、tural gas business for US$400mAccording to Fortune Oils announcement,Fortune Oil has agreed to sell its natural gasbusiness to China Gas for US$400m.Half of the consideration would be paid in cashand the other half would be satisfied by China Gas shares of 250m shares at maximum(to be issued in 4Q13
38、 at Fortune Oils request).China Gas share was suspended on Dec17 which is likely to be related to the acquisition of Fortune Oils natural gas assets.Click/copy this link into a browser to access the report:http:/pull.db-Holdings Alert-Share placement to address capex needs;CAPCO stake still takestim
39、eTicker:0002.HK,Closing Price:64.80 HKD,Target Price:69.50 HKD,Recommendation:BuyShare placement of 120m shares,raising HK$7.6bnCLP did a share placement on 12 December after market close at HK$63.25/shr(c.6%discount to the closing price and close to the middle of the offer price range ofHK$62.9-63.
40、9/shr).A total amount c.HK$7.6bn was raised after the placing of 120.3mnew shares which represent 5%of the existing share capital of CLP.The last time CLPdid a share placement was in 1997.Click/copy this link into a browser to access the report:http:/pull.db-Power Alert-5%FY13E EPS dilution from sha
41、re placementTicker:0916.HK,Closing Price:5.53 HKD,Target Price:8.30 HKD,Recommendation:BuyPage 4,on17-Dec-12Published by Eric Cheng on13-Dec-12Published by Kai-Ting Wangon 14-Dec-12Deutsche Bank AG/Hong Kong,11-Dec-12,8 January 2013UtilitiesUtility/Alternative EnergyLongyuan to issue 6%new shares an
42、d raise US$300mnAccording to a term sheet reported by Bloomberg,Longyuan plans to issue 6%or465mn new shares at HK$5-5.20/sh and raise US$300-312mn.This is Longyuans firstshare placement since the IPO in 2009.The issue price represents a discount of 6-10%to its closing share price.The net proceeds w
43、ill be mainly used as follows:50%foronshore wind power projects,20%for offshore wind projects,15%for overseas windprojects and 5%for solar projects.Based on our estimates,the placement will result in5%dilution to our FY13E EPS(after factoring in interest cost saving without liftingannual capacity ad
44、dition assumption 1.5GW).Also,its gearing ratio(net debt/totalequity)at end 2012 will be lowered by 15ppt to 132%from 147%previously.Click/copy this link into a browser to access the report:http:/pull.db-,Alternative Energy Alert-2nd batch of 2012 Golden Sun Program out:2.8GW in totalHigher-than-exp
45、ected volume from the 2nd batch Golden Sun ProgramThe Ministry of Science and Technology of the PRC announced the details of the 2012Golden Sun Program(2nd batch)on Dec 11.The total size of projects approved is2.8GW,which is above the earlier expectation of 2GW.Together with the 1st batch of1.7GW an
46、nounced in late April earlier this year,the total size of projects under the 2012Golden Sun Program would reach 4.5GW.Click/copy this link into a browser to access the report:http:/pull.db-Kong Utilities-2013 tariffs:lower tariff stabilization fund,fuel cost account deficitremainsBasic tariff hike o
47、f less than 1%and a likely further depletion of TSFCLP and Power Assets(PAH)announced their FY13 tariffs on 11 December,with CLPunchanged while PAH is raising its basic tariff by 0.6%.Such changes came in belowour 2%expectation,which we believe is mainly due to a rebate from the TariffStabilization
48、Fund(TSF),as well as some political consideration to keep the overall nettariffs increase at low levels.We do not assume any shortfall from the Scheme ofControl(SoC)return for both companies in 2013,though we note that risks of shortfallare increasing with TSF balances for both companies likely to f
49、all to somewhere aroundHK$100-200m levels by end-2013E(from c.HK$770m for CLP and c.HK$440m for PAHat end 2012E).Click/copy this link into a browser to access the report:http:/pull.db-Resources Power Alert-Power output continues to improve in NovemberTicker:0836.HK,Closing Price:18.40 HKD,Target Pri
50、ce:24.50 HKD,Recommendation:BuyWe held a discussion with CRP post the release of the Nov power and coal productionoutput.What surprised us was contracted coal price is already 9-10%higher than spotcoal price and CRP has re-priced some of its contracted coal downwards.Though coaloutput was below expe
