Money

Datang comes up short at IPO

By John Duce and Fox Hu (China Daily)
Updated: 2010-12-18 10:03

HONG KONG - China Datang Corp Renewable Power Co, the nation's second-biggest wind-power producer by capacity, fell on its debut in Hong Kong after a domestic rival canceled its initial public offering citing volatility.

The stock declined 6 percent to HK$2.19 (28 cents) at the close of trading. The benchmark Hang Seng Index gained 0.2 percent.

The Hang Seng has dropped 9 percent from a one-year high on Nov 8, reflecting investor concerns that the Chinese mainland will take more steps to curb inflation and cool the economy. Datang Renewable also fell after its IPO prospectus showed many of its wind farms are in remote areas of the mainland where the local grids don't have enough capacity to deliver all the power they can generate.

"Investors are not positive generally about the wind-power sector in the Chinese mainland," said Lee Yuk-kei, an analyst at Core Pacific Yamaichi International in Hong Kong.

"There's concern about the number of wind farms still not connected to the grid, and other wind companies have not been performing that well in Hong Kong trading recently."

Related readings:  Datang Renewable debuts 1% below IPO price  Datang Renewable raises $643m in HK IPO  Investors to snap up stakes in Datang unit  China Minmetals, Datang to invest in Everbright's Shanghai IPO

China Longyuan Power Group Corp, the biggest listed wind-power producer by capacity, has dropped 30 percent this year in Hong Kong, compared with the 3.9 percent gain of the Hang Seng. Xinjiang Goldwind Science and Technology Co declined 15 percent since its trading debut on Oct 8. Grid constraints in China may leave as much as 4 gigawatts of wind-power generation capacity lying idle, Sunil Gupta, managing director for Asia and head of clean energy at Morgan Stanley, said in November last year.

Huaneng Renewables Corp canceled its IPO in Hong Kong on Monday because of what it described as unexpected and excessive market volatility. The company was seeking to raise as much as $1.3 billion. Chongqing Rural Commercial Bank Co fell on its first day of trading on Thursday in the city.

China wants at least 15 percent of its energy to come from renewable sources, including wind, by 2020. It erected more wind turbines in 2009 than any other country and may install 18,000 megawatts of wind-power capacity this year, Bloomberg New Energy Finance estimates show.

Datang Renewable raised the minimum $643 million it sought from the IPO to expand its wind-power generating capacity and pay bank loans, according to the prospectus.

The wind-power producer is seeking to post a profit of at least 405 million yuan ($61 million) this year, compared with 366.9 million yuan in 2009, according to the IPO prospectus.

China Everbright Ltd, UBS AG, Credit Suisse Group AG, JPMorgan Chase & Co and Macquarie Group Ltd handled the sale for the unit of State-controlled China Datang Corp, the nation's second-biggest electricity producer.

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