Huajing Power FY earnings fall 77%

By Xu Shenglan (China Daily)
Updated: 2009-03-13 08:04

Power producer SDIC Huajing Power Holdings Co yesterday reported a 77 percent fall in full year net profit to 124 million yuan, on rising fuel costs and weak demand.

The Shanghai-listed firm said sales in 2008 fell 1.04 percent from a year ago to 658 million yuan. SDIC Huajing shares declined 1.64 percent yesterday to close at 10.22 yuan.

Analysts attributed the fall in profits to the costly coal used for power generation and sluggish demand.

SDIC Huajing Power Co produced 34.4 billion kilowatts of electricity in 2008, down 3.19 percent from a year earlier, as demand fell in the second half of last year, the company said.

Analysts said while the company may post higher gross profit margins this year, it is still expected to see a negative growth in power output.

"The company's electricity output is likely to decline this year as the local economies in Guangxi, Yunnan, Gansu and Xiamen (where SDIC Huajing has operations) is not expected to recover in the short-term," TX Investment Consulting Co said in a research note.

"But the gross profit margin of the company's fire-powered business is expected to increase dramatically as coal prices have dropped considerably and electricity tariff hiked," TX Investment said.

SDIC Huajing plans to further develop two wind and electricity projects in Gansu province, and plans to jointly explore coal electricity programs with Guizhou Panjiang Refined Coal.

SDIC Huajing is also planning a 7-billion yuan share placement to buy a sister power company from its parent State Development and Investment Corporation (SDIC).

Its parent is the largest State-owned investment holding company in the country, with businesses spread across power, coal mining, shipping, chemicals and financial sectors.

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