CHINA_IPPS:DIVING_INTO_DATAPOINTS_AMID_INDUSTRY_UP-CYCLE-2012-10-26.pdf
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1、Deutsche Bank Markets Research Asia China Utilities Utilities Industry China IPPs Date 25 October 2012 Industry Update Diving into datapoints amid industry up-cycle More upbeat after analysis of industry datapoints _ Deutsche Bank AG/Hong Kong All prices are those current at the end of the previous
2、trading session unless otherwise indicated. Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should b
3、e aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MICA(P) 072/04/2012. Michael To
4、ng, CFA Research Analyst (+852) 2203 6167 Eric Cheng, CFA Research Analyst (+852) 2203 6202 eric- Kai-Ting Wong, CFA Research Analyst (+852) 2203 6235 kai- Top picks Huaneng Power Intl (0902.HK),HKD6.01 Buy China Resources Power (0836.HK),HKD16.36 Buy Companies Featured Datang Intl Power (0991.HK),
5、HKD2.87 Buy 2011A 2012E 2013E P/E (x) 13.77 9.28 6.11 EV/EBITDA (x) 10.0 8.7 7.5 Price/book (x) 0.7 0.8 0.7 Huaneng Power Intl (0902.HK),HKD6.01 Buy 2011A 2012E 2013E P/E (x) 39.59 10.68 6.76 EV/EBITDA (x) 9.7 7.7 5.9 Price/book (x) 0.9 1.2 1.1 China Resources Power (0836.HK),HKD16.36 Buy 2011A 2012
6、E 2013E P/E (x) 18.36 12.07 8.89 EV/EBITDA (x) 8.9 8.3 6.5 Price/book (x) 1.3 1.3 1.2 China Power Intl (2380.HK),HKD2.17 Buy 2011A 2012E 2013E P/E (x) 14.36 7.96 6.18 EV/EBITDA (x) 12.5 9.1 7.3 Price/book (x) 0.6 0.6 0.6 Huadian Power (1071.HK),HKD2.14 Buy 2011A 2012E 2013E P/E (x) 8.67 4.97 EV/EBIT
7、DA (x) 11.8 7.3 5.7 Price/book (x) 0.5 0.6 0.6 Related recent research Date Recovery on track despite weaker-than-expected power demand 15 Oct 2012 With IPPs entering an earnings up-cycle, we resume publication of a quarterly update on sector datapoints, providing the latest trends in power consumpt
8、ion, coal prices, new capacity and utilisation. We believe investors will be more assured regarding a continued earnings rise in 2013E after getting abreast of the sequential data series through 2012. We retain our view that IPPs are in a bright spot due to a weak coal price outlook amid a potential
9、 utilisation pick- up. Sector valuations remain attractive at 0.6-1.2x P/B vs. FY13E ROE of 10- 17%. Also, FCF is turning positive for the first time in many years, securing decent dividend yield. Our top picks are CR Power and Huaneng Power. Power demand growth remains sluggish; up 2.9% in Sept Chi
10、nas power consumption in 1-9M12 was up 4.8% yoy, while the Sept rise was only 2.9% yoy. The sluggish demand growth YTD is due to weak power demand in the secondary and primary sectors, which rose 2.9% and -0.3% respectively. Power demand in the commercial and residential sectors remains strong and r
11、egistered double-digit growth of c.11%. For 4Q, we expect power demand to steadily pick up and we forecast 5.8% yoy growth for 2012. Thermal output growth negative for six consecutive months Monthly thermal power output has declined for six consecutive months, with Sept down 8% yoy. This decline has
12、 been driven by strong hydro output this year (+52% in Sept), and weak power demand. YTD, thermal utilization fell 7% yoy while hydro utilization rose 17% yoy. Thus, we believe thermal IPP earnings have more upside potential when the hydro situation normalizes. New thermal capacity additions down 22
13、% YTD In 1-9M12, China added 41GW of new capacity, considerably lower than in the same period last year. During the 1H and 3Q conference calls, the China IPPs guided lower capex for new thermal capacity, due to low profitability and fuel cost uncertainty. On the other hand, new hydro capacity has in
14、creased 7% to 9GW. The slower thermal capacity growth is beneficial for China IPPs as it will raise utilization levels after demand picks up. Coal prices continue to be weak; coal inventory has hit all-time high Despite the Daqin maintenance that was carried out on 8 Oct and additional seasonal coal
15、 demand from winter stockpiling, coal prices only edged up Rmb10/t WoW to Rmb640/t. The current spot coal price is 17% yoy lower than in 1H12. Coal inventory at power plants has also reached an all-time high of 31 days vs. the historical average of 15-20 days. We expect coal prices to remain weak du
16、e to high inventory and increased coal supply, as FAI in coal mining has been increasing at a double-digit pace for the past few years, while thermal capacity addition has slowed to single-digit pace. We expect the average spot coal price to decline 14% and 9% in 2012 and 2013, respectively. DCF-bas
17、ed target prices; key risks We value the sector using DCF through 2020, assuming WACCs of 8.8-9.4%. Key downside risks include a coal price rebound, falling utilization rates, equity placement and non-power business delays. 25 October 2012 Utilities China IPPs Page 2 Deutsche Bank AG/Hong Kong Month
18、ly power sector update Power consumption remains weak; up 2.9% yoy in Sept According to the CEC, Chinas power consumption increased 2.9% yoy in Sept 2012. Since April, Chinas power consumption growth has remained at less than 6% yoy, vs. its double-digit growth in 2011. In 1-9M12, power demand was u
19、p 4.8% yoy. Decoding by source of consumption, primary industry demand growth was weakest, at -0.3% in 1-9M12, followed by secondary industry at a mere 2.9% yoy. Commercial and residential demand remains strong and was up 11.3% and 11.6% yoy, respectively. We project 5.8% yoy growth for 2012, and 8.
20、6% yoy growth for 2013. Figure 1: Monthly power consumption total Figure 2: Monthly power consumption industrial 0% 5% 10% 15% 20% 25% 30% 200 250 300 350 400 450 500 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12
21、Aug-12 Sep-12 Total (bn kWh)YoY growth -5% 0% 5% 10% 15% 20% 25% 30% 0 50 100 150 200 250 300 350 400 Jan/11 Feb/11 Mar/11 Apr/11 May/11 Jun/11 Jul/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Sep/12 Industry (bn kWh)yoy Source: Deutsche Bank, Wind So
22、urce: Deutsche Bank, Wind Figure 3: Monthly yoy power consumption growth rate by industry 0% 5% 10% 15% 20% 25% 30% 35% 1-2M10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 1-2M11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 1-2M12 Mar-12 Apr-12 May-1
23、2 Jun-12 Jul-12 Aug-12 Sep-12 IndustryResidentialCommercial Source: Deutsche Bank, Wind YTD, residential and commercial power usages have been more resilient than industrial usage. 25 October 2012 Utilities China IPPs Deutsche Bank AG/Hong Kong Page 3 Figure 4: Power consumption growth vs. GDP growt
24、h (quarterly) -10% -5% 0% 5% 10% 15% 20% 25% 30% -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-1
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