Wind powers Longyuan's rise
By Kennix Chim and Leonora Walet |
December 11, 2009, Friday
|
Print Edition
Print Edition
SHARES in China Longyuan Power Group Corp, the world's fifth-largest wind power generator, rose 9 percent on their Hong Kong debut though this was less than expected and came after a United Nations body blocked carbon financing for some China wind projects.
Longyuan's US$2.2 billion initial public offering, the joint eighth-largest global offering so far this year, drew keen interest from investors eyeing the fast-growing renewable energy sector, and attracted wealth fund China Investment Corp, United States billionaire investor Wilbur Ross and China Life Insurance Group.
China aims to boost wind-generated power to 100 gigawatts by 2020 with investments possibly worth over US$150 billion, which will make it the world leader in wind energy.
Renewable energy accounts for just a fraction of 1 percent of China's total electricity output. China hopes to raise that to 10 percent by 2010 and 15 percent by 2020.
Longyuan, Asia's largest wind power generator, plans to use the IPO proceeds to build mainland wind power projects and repay a loan.
However, its first-day gains were less than had been predicted, with analysts blaming a decision earlier this week by a UN agency to reject carbon financing for five of its wind projects.
"Investors are worried about Longyuan's 2010 profit after the UN decision, which will limit its shares' near-term upside," said Teresa Chow, fund manager at RBC Investment Management.
Longyuan's debut compares favorably, however, with two recent big IPOs by Sands China and Minsheng Banking, which recorded first-day falls of 10 percent and 3 percent, respectively.
Shares of Longyuan, a subsidiary of China Guodian Corp, one of China's five largest power generation groups, ended at HK$8.93 (US$1.15) yesterday, versus a top-of-the-range IPO price of HK$8.16.
The benchmark Hang Seng Index eased 0.2 percent.
Under Kyoto's Clean Development Mechanism, companies can invest in clean energy projects in emerging countries and receive carbon offsets which can be sold for profit.
Longyuan played down the impact of the UN rejection, saying this would represent less than 1 percent of its 2009 net income.
Longyuan's US$2.2 billion initial public offering, the joint eighth-largest global offering so far this year, drew keen interest from investors eyeing the fast-growing renewable energy sector, and attracted wealth fund China Investment Corp, United States billionaire investor Wilbur Ross and China Life Insurance Group.
China aims to boost wind-generated power to 100 gigawatts by 2020 with investments possibly worth over US$150 billion, which will make it the world leader in wind energy.
Renewable energy accounts for just a fraction of 1 percent of China's total electricity output. China hopes to raise that to 10 percent by 2010 and 15 percent by 2020.
Longyuan, Asia's largest wind power generator, plans to use the IPO proceeds to build mainland wind power projects and repay a loan.
However, its first-day gains were less than had been predicted, with analysts blaming a decision earlier this week by a UN agency to reject carbon financing for five of its wind projects.
"Investors are worried about Longyuan's 2010 profit after the UN decision, which will limit its shares' near-term upside," said Teresa Chow, fund manager at RBC Investment Management.
Longyuan's debut compares favorably, however, with two recent big IPOs by Sands China and Minsheng Banking, which recorded first-day falls of 10 percent and 3 percent, respectively.
Shares of Longyuan, a subsidiary of China Guodian Corp, one of China's five largest power generation groups, ended at HK$8.93 (US$1.15) yesterday, versus a top-of-the-range IPO price of HK$8.16.
The benchmark Hang Seng Index eased 0.2 percent.
Under Kyoto's Clean Development Mechanism, companies can invest in clean energy projects in emerging countries and receive carbon offsets which can be sold for profit.
Longyuan played down the impact of the UN rejection, saying this would represent less than 1 percent of its 2009 net income.
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