HONG KONG: The newly listed China Longyuan Power Group, the largest wind-power producer on the mainland, rose almost 10 percent on its trading debut in Hong Kong yesterday, after raising HK$16.7 billion in the city's third-largest initial public offering (IPO) this year.

Shares in China Longyuan yesterday ended 9.44 percent, or HK$0.77, higher than the top-of-the-range offer price of HK$8.16, despite the 0.19 percent drop in the benchmark Hang Seng Index.

Beijing-based China Longyuan, also the world's fifth largest wind power generator, plans to use the IPO proceeds to construct wind power projects on the mainland and repay bank loans.

Speaking after the listing ceremony in Hong Kong yesterday, chairman and non-executive director Zhu Yongpeng believes the company's business prospects will remain strong, as the country has just started its wind-power development.

"With the support from the central government's policy, we are confident about solid profitability in the future," Zhu said.

Investors are showing keen interest in the wind-generated power sector, as the central government aims to boost the use of renewable energy in the country and rely less on the more polluting coal.

China Longyuan sold 2.14 billion shares in the IPO, while the Hong Kong retail portion was 234 times oversubscribed.

The overwhelming subscription has triggered a claw-back option, raising the retail tranche to 20 percent from 5 percent of the total offering.

Kingston Lin, director at OSK Securities Hong Kong, said the first-day trading of China Longyuan was satisfactory, though the shares lagged behind the 12 percent jump on the gray market on Wednesday.

Lin expects business prospects of the wind-power generator will remain robust in the short term, benefiting from the central government's initiative to promote renewable energy.

"China Longyuan is likely to achieve strong growth in earnings in the near future, which could also give a boost to its share performance," Lin said, adding that the company may also maintain its leading position in the country's renewable energy sector.

Renewable energy currently accounts for less than 1 percent of the total electricity output on the mainland. The central government aims to raise the proportion to 10 percent by 2010 and 15 percent by 2020.

The government has also planned invest over $150 billion to boost the country's wind-generated power to 100 gigawatts by 2020.

Xie Changjun, president of China Longyuan, said last month that the company would double its wind-power capacity to 6.5 gigawatts by the end of next year. One gigawatt can supply power to around 1 million households on the mainland.

Underwriters of the IPO, including Morgan Stanley and UBS, on average expect China Longyuan's earnings to surge to more than twice their present level, to 890 million yuan in 2009, while the figure is expected to double again to 1.78 billion yuan in 2010.

(HK Edition 12/11/2009 page3)