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渐飞研究报告 - http://bg.panlv.

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CORPORATE TAKEAWAYS: CHINA POWER

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渐飞研究报告 - http://bg.panlv.net

DAISY ZHANG, CFA CHINA POWER 28 OCTOBER 2010

Contents

1) A-Power Energy .......................................................................................................................................................................... 4

2) China Gas Holdings .................................................................................................................................................................... 6

3) China Longyuan .......................................................................................................................................................................... 8

4) China Power Int’l ....................................................................................................................................................................... 12

5) China Wind Power..................................................................................................................................................................... 14

6) C P New Energy......................................................................................................................................................................... 16

7) Datang Int’l Power ..................................................................................................................................................................... 18

8) ENN Energy ............................................................................................................................................................................... 22

9) Hong Kong Energy.................................................................................................................................................................... 24

10) Hyflux Ltd................................................................................................................................................................................. 26

11) ZhongDe Waste Tech.............................................................................................................................................................. 28

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渐飞研究报告 - http://bg.panlv.net

CHINA/POWER 28 OCTOBER 2010
Company BBG code Rating Share TP Chg Mkt cap P/E Yld
price in TP FY1 FY2 FY1
(HKD) (HKD) (%) (USDm) (x) (x) (%)
China Longyuan 916 HK BUY 7.93 10.88 - 7,608 27.3 22.0 0.0
Datang Int'l Power 991 HK BUY 3.16 3.65 - 11,164 17.5 15.0 2.6
CR Power 836 HK BUY 15.06 20.30 - 9,050 14.0 12.4 2.2
Huaneng Power 902 HK BUY 4.39 5.28 - 10,404 10.7 9.8 4.7
Huadian Power 1071 HK REDUCE 1.81 1.69 - 3,637 59.3 8.9 0.5
Prices as at 27 October 2010; Source: Bloomberg, BNP Paribas estimates

INDUSTRY OUTLOOK ÍÎ

ƒ Tariff hike is on the way, but spot coal price rally will come first.
ƒ Power demand growth to mitigate, with 8% in 4Q10.
ƒ Thermal IPPs to face sell off pressure.
ƒ Renewable energy will boom in 12th 5-year plan; top pick: CLYPG.

Renewable energy boom
Key message from China Conference
Daisy Zhang, CFA
Several utility companies attended our China Conference in Guilin, including
+8621 6096 9025 China Longyuan Power Group (CLYPG), Datang Power Int’l, China Power
daisy.zhang@asia.bnpparibas.com International, etc. Most companies expect weak growth in power demand in the
near future, with 8% & 10% y-y increase in 4Q10 and 2011E, respectively.
Though, we do not expect weak spot coal price for the rest of the year given the
Alvin Cheng following: 1) the need for heating will go up in winter; extremely cold weather
+8621 6096 9029
Alvin.h.cheng@asia.bnpparibas.com spreading across China will further push heating demand; 2) this is the most
sensitive period for both power & coal players, given the upcoming annual
contract coal negotiation; Usually coal players restrict coal production during the
period, in order to get the barginning power for contract coal negotiation. Most
companies admitted that local pricing bureaus are investigating with local power
plants, regarding coal cost hike and percentage of loss for plants. Though we
believe IPPs’ price performance will face some pressure with an expected spot
coal price rally.

Wind power - bright prospect
With the upcoming renewable energy target for the 12th Five-Year Plan, we
expect hydro power, wind power, and nuclear power will become the next growth
engines for China power categories. With the government focusing on power grid
transmission network upgrade, we expect wind power grid connection restriction
problem to be gradually solved in the next couple of years. We expect CLYPG to
record flat utilization hour in 2010, despite 9.6% y-y decline in 1H10.

Upbeat on renewables; CLYPG is our TOP Pick
In the utility sector, we prefer renewable players most, given the government
support and upcoming 12th Five-Year Plan. We expect CLYPG to record strong
capacity expansion, resilient earings growth. For thermal IPPs, we expect the
sector to face sell-off pressure, given the strong spot coal price rally, upcoming
cold weather across China, and tight coal transportation capability at
Qinghuangdao Port.

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http://bg. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. up from 13. Gross profit in the second quarter increased 51.02 (0.1% to USD74. CFA +8621 6096 9025 EV/EBITDA (x) 11. design and operation of the assembly facility.6 1. which typically 3m avg daily turnover (USD m) 5. 4 28 October 2010 .000 sqft Shenyang facility has a total annual Source : Bloomberg capacity of 1GW (300 units of 2.7MW and 400 units of 750KW turbines).5%.00 ƒ Tops the distributed-generation systems in China.6 (9.7) (15. .08 ƒ Improved margin via structural improvement and export.1) N/A friendly DG projects from 25MW to 400MW.4 N/A on energy-efficient and environment ROE (%) 30. net profit 29 (17) 35 that provide power to meet local demand. N/A operating subsidiaries.8 carry slightly higher margins. is a leading Daisy Zhang.3% of the total 5 (100) revenue attributable to the sale of PV solar equipment. Highly respected Chinese institutes.4 8.6m from USD7. Free float (%) 73 Fast-growing manufacturer of wind-turbine generators Major shareholder Jinxiang Lu (23%) A-Power also operates one of the largest wind turbine manufacturing 12m high/low (USD) 21. Bloomberg Consensus chemical. Within the DG Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 business segment. focusing daisy. including China Academy of Science and Tsinghua University. EPS 2011 (USD) 1. A-Power Energy APWR US NON-RATED CHINA / ELECTRIC UTILITIES CLOSE USD7.0 A-Power. cement.49) 0.2) (148.72 facilities in China.04/5.4% in the same quarter of 2009.1) (31.8m from 0 USD57. (USD) A-Power Energy (%) The company has also tapped into international markets in Southeast 25 Rel to MSCI China 150 Asia. Gross Relative to country (%) (3.9) USD11.3) (38. domestic sales represented approximately 67. Market Recs. EPS 2012 (USD) N/A ƒ Ready for wind-turbine generator manufacturing.4% of total revenue while international DG sales represented 32. Sources : A-Power Energy. In March 2009. installation of turbines and follow-up maintenance.4 (15. Recurring P/E (x) 7. WE ARE NOT COMMENTING ON THE INVESTMENT MERIT OF ANY SECURITIES OF THE SUBJECT COMPANY.7) margin was 15. 2 0 0 Leading provider of distributed- KEY STOCK DATA & CONSENSUS EARNINGS generation systems YE Dec (USD m) 2008 2009 2010E Distributed-generation (DG) systems are Revenue 265 311 441 small-scale. the Middle East. targeting industries such as steel.com Price/book (x) 1. THIS INFORMATION IS PROVIDED SOLELY . with 2. The increase was primarily due to higher revenue 10 (50) recognised in the company's core DG business.2 6. The 320. through its China-based Dividend yield (%) .bnpparibas. The Next results December 2010 improvement in gross margin was attributable to an increase in large- Mkt cap (USD m) 337 scale DG orders as well as higher international sales. are also in R&D cooperation with A-Power in both wind-turbine and other new- energy technologies.52 WHERE IS THE STREET? Wings added to the core Consensus Target Price (USD) 10. Recurring EPS (USD) 1.0) nm heat to electricity by using a steam turbine. electricity-production facilities Rec. Positive Neutral Negative ƒ Alliance with top-notch partner in R&D.zhang@asia. A-Power secured higher profile partners in wind-turbine manufacturing technologies: Fuhrlander AG of Germany and Norwin AS of Denmark will assist with selection of suppliers. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH.net FOR INFORMATION PURPOSES.5m in 2Q09.3) 10. Africa and Eastern Europe.1% to Absolute (%) (0.74 The most common DG power system in China converts industrial waste gas and EPS growth (%) (45. training. 100 20 Improved margin via structural improvement and export 50 15 A-Power’s revenue in 2Q10 increased 30.3) (10.6% of total DG Share price performance 1 Month 3 Month 12 Month revenue. and food processing. A-Power also signed a JV agreement with GE Drivetrain to produce gearboxes in China.8 provider of DG systems in China.7m in the same period of the prior year.panlv.

Now we are readying all the documents related to the Texas project. magnetic. Q2: Cooperation with external parties: Earlier in August 2010. a respected research institution in Asia with track record of developing new energy technologies. component sourcing. 5 2 BNP PARIBAS .0MW or larger turbines to customers in the second half of 2010. We are building a platform that will establish A-Power as an emerging leader in both distributed power and alternative power generation systems and are working aggressively to capitalize on the long-term growth opportunities in these areas. and it's really depending on the onsite situation and changes in US laws.net FOR INFORMATION PURPOSES. the company signed cooperative agreements with The United Steelworkers (USW) and Shenyang Power Group (SPG). Expertise in wind. And by the end of this year. The USW will also guide and work collaboratively on all aspects of A-Power's US market strategies including manufacturing. what is the other type of new energy the company is looking into at the moment? Answers: Joint venture with the China Science Academy. we project that by the end of September. we could have one sample machine shipped to Texas. The company expects that the cooperation with USW will benefit the development of its projects including the planning of a wind turbine assembly plant in Nevada and the ongoing development of the supply chain for the expected delivery of wind turbines to the 615MW wind farm under development in Texas.000 tonnes of steel from suppliers with employees represented by the USW. Q4: Future plan for alternative energy: In addition to wind-turbine generator manufacturing. currently everything is progressing very smoothly as planned. assembly.http://bg. solar.7MW turbines. we could finally complete this project. the company renewed its license agreement with German wind technology company Fuhrlander AG (Fuhrlander). 2010. that is 30 September. A-Power and SPG anticipate purchasing over time approximately 50. DAISY ZHANG. We expect to begin delivery of 2.7MW wind turbines throughout China using Furhlander's F2500 technology. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. operate. tidal and biomass. the company signed cooperative agreements with The United Steelworkers (USW). what’s the detail about this agreement? Answers: Earlier in August. (2010IR) In July 2010. geothermal. And also. distribution and wind energy project development. and obtained the right to manufacture. as the wind industry is increasingly shifting to higher capacity turbines. By the first half next year or may be the second half of next year.panlv. A-Power will own 70% rights to new technologies. service and sell 2. Q3: Projects in Texas: Can the company give us some detail on what the next steps will be in West Texas? How many wind turbines will be delivered and when? Answers: With regards to the Texas project. we plan to get 100 units ready for wind farm projects. the Company expects to bolster its position in the market of high capacity 2. How can we expect the benefits from this cooperation? And also regarding the company’s agreement with Fuhrlander. CFA A-POWER ENERGY 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Wind turbine generator contribution: With the preparation of the facilities and technologies in place. we project that by the end of the first half of 2012. With the license agreement with Fuhrlander. what’s the realistic date for the wind-turbine generator business to contribute to the financials? Answers: Significant sales are expected in our wind turbine business in the second half of the year. This is our schedule and timetable subject to some changes. between 30 units to 50 units will be ready for shipment. THIS INFORMATION IS PROVIDED SOLELY .

3 China Gas is operating in 134 city Recurring P/E (x) 96. 10 5 2 Dominance in China gas supply KEY STOCK DATA & CONSENSUS EARNINGS China Gas Holdings (China Gas) is the YE Mar (HKD m) 2008 2009 2010E leader in natural-gas distribution and Revenue 2. The company’s share of the LPG market has grown steadily to 5% from 4% last year.bnpparibas.zhang@asia. 5.3 36. Zhejiang. 6. China Gas secured 50 new city gas Next results December 2010 projects in 10 provinces/autonomous regions/directly-administered cities Mkt cap (USD m) 1.00 60 4.3) 28.5) (2.9 nearly 35. one in Jiangxi Province.994 over the past year.7 New projects and expansion Relative to country (%) (1. significantly up from 2.1m household users and +8621 6096 9025 EV/EBITDA (x) 34.6 24.16 China decided to construct the West-East Pipeline. (HKD) China Gas Holdings (%) 275. Positive Neutral Negative ƒ Good number of diversified new projects.35 ƒ 2010 results show significant growth. THIS INFORMATION IS PROVIDED SOLELY .03/3.5% 3. Share price performance 1 Month 3 Month 12 Month Absolute (%) 3. two in Hunan Province.3 14.016m.212m.7 26.04 0.324 11.2619 from HKD0.3 0.2 7. two in Heilongjiang Province. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. one in the Inner Mongolia Autonomous Region. piped-gas projects. China Gas completed a 49% 12m high/low (HKD) 5.00 Rel to MSCI China 80 Guangxi. 3m avg daily turnover (USD m) 1. Profit for the year was HKD1.58 ƒ Leader in the China natural-gas distribution segment.net FOR INFORMATION PURPOSES.6 vertically integrated LPG operator in Sources : China Gas Holdings . up 61.116m.7 16. and coverage in Guangdong. By FY10 (year-end March). The company is also the only ROE (%) 5.0 five in the Guangxi Zhuang Autonomous Region.00 0 from the same period last year. The company has been Rec.http://bg. Jiangsu and Anhui provinces.00 40 Mature but still growing fast 20 For FY10.8 network of more than 31.5 one in Jiangsu Province.1%.943 km serving Daisy Zhang. Gross profit amounted to HKD2. China Gas Holdings 384 HK NON-RATED CHINA / GAS UTILITIES CLOSE HKD4.7 concessions and possesses a pipeline Dividend yield (%) 0. Fujian.000 m3 of LPG storage capacity. and HKD0. WE ARE NOT COMMENTING ON THE INVESTMENT MERIT OF ANY SECURITIES OF THE SUBJECT COMPANY. and also underpinned its position in Fujiian Province’s gas market. EPS 2012(HKD) 0. 6 28 October 2010 . an 2.1%.9%. EPS growth (%) (34.3 daisy. The company started five in Liaoning Province. Market Recs.481 industrial and commercial users. an increase of Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 658. Free float (%) 60. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES.3 0.00 (20) increase of 48.8 136. EPS 2011 (HKD) 0. turnover of China Gas amounted to HKD10.03 0.27 ƒ Largest and only vertically integrated LPG supplier.5 4. one in Anhui Province Major shareholder Xu Xau Lan (19%) and three were in Guangdong Province.panlv. This transaction has significantly expanded the company’s natural gas user base and sales volume.5) (29. Bloomberg Consensus China with 11 LPG-receiving terminals.4 3. net profit 141 104 532 operating in China since 2002 when Recurring EPS (HKD) 0.552 6.com Price/book (x) 4. CFA approximately 5.4 For new-project developments.1%.25 WHERE IS THE STREET? A leader on the rise Consensus Target Price (HKD) 4.0311.035 refilling stations.2) 411. Overall net profit margin and EPS were 9.1 3.03 equity interest in the Fujian Anran Gas Investment Co during the financial Source : Bloomberg year of 2010 which led to the operation and management of its 29-city.

what’s the group’s projection for the growth over the next few years.9% wellhead natural gas price hike on 2010-11 earnings should be immaterial.http://bg. ƒ faster CNG stations rollout: To reach at least 180 CNG stations in 50 cities by 2012 – improving overall operating margins of gas sale. DAISY ZHANG. price hike will stimulate upstream domestic production and encourage LNG imports.6% of total gas sales.1% of users for China Gas): automatic 100% pass-through ƒ Low elasticity: retail price hike of only RMB0. we will accelerate the pace of asset acquisitions in the LPG market and invest more to build up our class three stations network with brand reputation and economies of scale. In our upstream resource integration. What is management’s outlook on the LPG business of the Group? Answers: Currently. ƒ No impact on commercial & industrial gas sales (represents 81. but current market share still suggests great potential. and what catalysts can be expected for driving growth? Answers: Natural gas: ƒ increase in penetration rate: to reach 43% by 2012 – enhanced connection fee income.panlv. We will continue to strengthen our unique vertically integrated LPG industry chain. we have entered into direct procurement contracts with a number of refineries to reduce the cost of procurement. 7 2 BNP PARIBAS . In our downstream market. linking the procurement and import in the upstream. LPG: ƒ wider distribution network: To cover nine provinces with wholesale and retail supply. ƒ increase in sale volume: to reach at least 2m tonnes by 2012.23/m3 and we anticipate residential users can absorb with minimal impact on demand ƒ On a macro-view. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. what’s the potential impact on the company’s business? Answers: Given residential gas sales is only 11. we are the largest and the only vertically integrated LPG provider in China. THIS INFORMATION IS PROVIDED SOLELY . the impact of the recent 24.net FOR INFORMATION PURPOSES. Q3: Future growth potential: After such fast growth in this reporting period. further easing near-term shortage of supply Q2: Competition in LPG supply: Sales of LPG currently accounted for around half of the company’s total revenue. storage and distribution in the midstream and the retail and sales system in the downstream. ƒ more industrial connections. CFA CHINA GAS HOLDINGS 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Natural gas price hike: Given the possibility of upstream natural gas price hike in 2010-11. improved margins: to reach 15% gross margin and 5% net margin by 2012. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. more gas to connect industrial customers in backlog – further increase gas sale volume.

9) - and stable utilization hours will provide a similar return to the company. (%) 0.267 Starting from 2003.cheng@asia.3) (9.36 capacity of China Longyuan (CLYPG) has Prior rec. In EPS est.6 18.1%. 15 4 2 ƒ Solar energy – remarkable growth potential. Even though the construction cost of low-wind farms is 5-10% higher than for normal-wind farms.24 11.6 By June 2010.0 18. 渐飞研究报告 . net profit 1.9%.com (HKD) China Longyuan (%) Hainan and Shandong.88 HKD7.8) ƒ Wind.7 RMB1.8 72.77 0. Our DCF assumptions include a risk-free rate of 2. end-users. 8 28 October 2010 .992 Five-Year Plan Rec.4%. we estimate that high on-grid tariffs Relative to country (%) (5.0 By 1H10.7 was also achieved: in addition to the six EV/EBITDA (x) 9. the main growth engine. with a DCF-based TP of HKD10. the southeast coastal provinces.0x P/E and 9.88 916 HK PRIOR TP CLOSE HKD10.net China Longyuan TARGET HKD10.36 been consistently growing at a high pace. EPS (RMB) 0. Anhui. The 8 company signed a cooperation agreement with the Chuzhou government 6 (13) to develop four low-wind farm projects. Tianjin.628 Further progress in CDM 3m avg daily turnover (USD m) 13. and convenient distance transmitted to Absolute (%) 2.2 Up with wind EPS 2011 (RMB) 0.8 projects were further developed in +8621 6096 9029 Yunnan.31 0.7x EV/EBITDA on our 2011 estimates.0 0.0 0.4 4.31 0. Geographical diversification Dividend yield (%) 0. Positive Neutral Negative ƒ 1H10 – stellar results beat consensus.3 22. Gansu and Xinjiang).2% UNCHANGED HOW WE DIFFER FROM THE STREET ADR TICKER: CLPXF US NEW INFORMATION BNP Consensus % Diff Target Price (HKD) EPS 2010 (RMB) 10.2 We do not factor in offshore wind farms in our earnings model. In addition. YE Dec (RMB m) 2010E 2011E 2012E Wind: blow further with 12th Revenue 13. As of 30 June 2010.bnpparibas.0 0.768 3.http://bg. total attributable installed EPS growth (%) 43.840 17. KEY STOCK DATA ƒ Further progress in CDM.90/6. and a terminal growth rate of 3.1 Hebei. CLYPG is trading at 22.7 9.0 2.865 2. BNP Paribas estimates from its parent company should be another share-price catalyst.72 Offshore wind farm is an additional plus: BUY 3m historic vol. with total 600MW installed Dec-09 Mar-10 Jun-10 Sep-10 capacity.7 9. We ADR ticker CLPXF US expect Dafeng’s offshore wind farm to boost CLYPG’s wind-installed ADR closing price (USD.61/kWh). wind-farm development arena. We believe low-wind farms will have several competitive advantages such as low grid connection restriction. we believe the proposed asset injection Sources: Bloomberg consensus. the total installed Recurring EPS (RMB) 0. daisy.808MW and contributed operating profit of over Recurring P/E (x) 27. Alvin. We find the current valuations undemanding compared to our forecast of 54% earnings CAGR and 28% EPS CAGR for the next three years.88. high on-grid wind- Share price performance 1 Month 3 Month 12 Month power tariffs (RMB0.25 0. the pipeline capacity of the Rel to MSCI China company reached 50GW.25 0. 12m high/low (HKD) 10. 27 July 2010) 1. We reiterate our BUY call on CLYPG.34 (8.5 1. a market risk premium of 9. 26% ahead of our previous expectation.6 .06 capacity by 4.244 15.5%.bnpparibas. wind power Alvin H Cheng ROE (%) 8. Next results April 2011 Mkt cap (USD m) 7. for a total installed Major shareholder China Guodian Group (64%) capacity of 488MW.1 major areas (Northeast provinces.3 91. Shanxi.31 0.5b.88 0.1 1.25 9.6 7. Market Recs.com Net debt/Equity 116. CFA +8621 6096 9025 Price/book (x) 2.4 Mongolia.93 BUY CHINA / INDEPENDENT POWER PRODUCERS UP/DOWNSIDE +37. Ningxia. Chg.5 0.2 8. Key downside risks to our TP are lower utilisation hours if grid connections lag and any change in the government’s support policies. (%) 35.zhang@asia. 27 10 Low-wind farm – the next to focus 7 CLYPG has entered the low-speed.0 capacity reached 3. Inner Daisy Zhang.panlv.h.5 23. there are 11 projects registered as CDM (Clean Free float (%) 36 Development Mechanism) for China Longyuan.

500 hours. The limitation on electricity output was estimated to account for approximately 4. The 1.086 hours while certain regions still experienced limitations on electricity output.000 per MW including cable cost. the company only added 49. 60% is from 1. In the near future.9% of the accumulated wind power electricity output. in the median range of the bids. Longyuan Power won the 200MW Dafeng inter-tidal wind-farm project. China Power Investment.000 MW target. The construction of new projects will accelerate after this October. adjustments and pilot runs are required. Q3: Planned projects: In 1H10. which is the threshold we set for all our new projects. 渐飞研究报告 . CFA CHINA LONGYUAN 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Off-shore wind farm bidding: Longyuan Power has participated in the bidding of all four projects in the recent off-shore wind farm tendering in Jiangsu province.330 MW of capacity in the pipeline. and will work with Xinjiang Goldwind as its wind-turbine supplier. The construction cost for this project is around RMB14. CLYPG’s bidding price for Dafeng project was RMB0. Q2: Utilization estimation for the full year: The utilization hours for the wind-power plants for the first half appears to be low compared to last year. more than 60% of 2000 MW were added in 4Q09. What’s the current progress of this bidding? Answers: Just before the conference. the average utilisation hours of the Group’s wind power generating units was 1. we can see us still purchasing 1. reliability and technology maturity still need to be approved. for some of the capacity complete at the beginning of this year. we need to be cautious. We expect the IRR of this project to be above 12%. For larger turbines such as 3MW and above.5MW or above turbines. to achieve its 2. Q4: Technology: Now we see a trend of using larger and larger wind turbines in China. Also.http://bg. By comparison.panlv. And some of those wind farms have already completed construction. How is the company planning to complete its full-year target given the low base in the first half? Answers: Longyuan Power is confident of completing its full year new installation target.5MW to 2. What’s the major reason behind the decrease and what is outlook for the utilization hours in the second half? Answers: During the first half of 2010.5 to 2MW turbines as our main choices. For larger turbines.net DAISY ZHANG. The other three projects were won by Datang New Energy- Sinovel.5MW turbine remains our main force contributing more than half of our installed capacity.6396/kWh. The utilization hour is estimated to be in the range of 2.5MW to its wind-power installed capacity. The company has over 2. and others are expected to commence operation in 4Q10.400 to 2. while it only has been around two years since China begin to use such turbines in the mainstream. this also caused limited power generation from these capacity. The European countries stayed at the 1.0MW stage for as long as 4-5 years. So we believe the company is on track with its expansion plan.Sinovel and Shandong Luneng-Shanghai Electric. What is Longyuan’s mix in its current installed turbines and what will be the main turbines Longyuan will use in the future? Answers: Of our total installed capacity. 9 2 BNP PARIBAS . The attributable capacity or China Longyuan has grown by 66% y-y in the first half while generation has grown by 56% – 10% lower than capacity growth.

7 Operating ROIC (%) 6.3 37.9 43.692 5.5 4.395) (2.5 14.07 0.5 168.859 4.509 Sales of steam 121 230 163 163 163 concession 2.6 7.3 33.7 19.768 3.050 Depreciation (1.7 4.0 6.4 157.9 9.267 Per share (RMB) Recurring EPS * 0.2 Effective tax rate (%) 0.200 883 750 750 750 Sales electricity equipt.25 0.763 Other operating income 390 574 765 980 1.736 Tax (2) (296) (498) (811) (1.1 Operating EBITDA margin (%) 29.9 8.7 39.31 0.6 Operating EBITDA (%) 31.000 2.9 5.6 18.425) Preferred dividends 0 0 0 0 0 Other items 0 0 0 0 0 Reported net profit 337 894 1.228) Gross profit ex depreciation 2.07 0.5 15.6 8.782 5.9 77.678 Net financing costs (857) (1.657) (6.0 41.664) (2.2 8.865 2.05 Growth Revenue (%) 22.4 4.371) Goodwill amortisation 0 0 0 0 0 Operating EBIT 1.2 Net margin (%) 3.6 18.013) (2.0 Reported EPS (%) 56.6 29.5 31.1 12.4 45.17 0.0 Operating performance Gross margin inc depreciation (%) 12.9 64.2 5.9 60.944 3.7 Interest cover (x) 1. BNP Paribas estimates 10 3 BNP PARIBAS . - ROE (%) 10.286 Operating costs 0 0 0 0 0 Operating EBITDA 2.504 4.9 13.5 18.2 73.9 16.3 120.957 7.467 9.744 13.083) (1.0 23.5 23.9 35.1 60.5 8. - ROIC (%) 5.17 0.555 9.244 15.9 3.0 0.593 6.044) Profit after tax 614 1.983) (7.8 16.2 7.00 0.1 6. .07 0. .6 13.panlv.875 6.1 17.647 3.7 9.5 Dividend payout on recurring profit (%) 106.9 * Pre exceptional.5 Operating EBIT (%) 26.6 9.752 6.1 56. .4 44.047) Associates 53 105 105 105 105 Recurring non operating income 0 0 0 0 0 Non recurring items 0 0 0 0 0 Profit before tax 616 1.152 8.3 Inventory days 13.992 growth engine Cost of sales ex depreciation (6. .768 3.0 Debtor days 44.857 10.http://bg.3 45.8 22.840 17.9 19. CFA CHINA LONGYUAN 28 OCTOBER 2010 FINANCIAL STATEMENTS China Longyuan Profit and Loss (RMB m) Strong wind power Year Ending Dec 2008A 2009A 2010E 2011E 2012E contribution is the main Revenue 8.020) (1.329) (2.352 9.06 0.3 15.9 8.998 12.267 Non recurring items & goodwill (net) 0 0 0 0 0 Recurring net profit 337 894 1.194 4.31 0.9 101.449 7.1 48.3 13.8 ROA (%) 4.7 2. 渐飞研究报告 . .3 21.376 14.370) (1.000 Others 218 388 404 420 437 0 0 0 0 0 0 0 0 0 0 Sources: China Longyuan.36 DPS 0.5 23.837 12.net DAISY ZHANG.590) (2.8 Operating ROIC – WACC (%) .4 157. pre-goodwill and fully diluted Revenue By Division (RMB m) 2008A 2009A 2010E 2011E 2012E electricity 5.869) (6.800 2.587 8.2 36.9 43.8 ROIC – WACC (%) .7 65.865 2.421 2.0 17.0 Operating EBIT margin (%) 16.2 14.7 55.3 Recurring EPS (%) 56. 264 128 130 131 133 Sales of coal 0 1.113 3.7 145.5 62.5 Creditor days 127.03 0.36 Reported EPS 0.2 144.686) (3.1 67.8 6.648 1.25 0.692 Minority interests (276) (753) (1.0 10. .9 7.441) (5.

272 10.2 EV/invested capital (x) 1.5 0.401) (3.9 0.7 37.5 P/FCF (x) (3.1 1.2 1.371 Associates & minorities 224 648 1.770 2.3 5.768 3.5 6.08 2.087 Long term debt * 17.9 0.35) (2.9 10.8 10.04 Financial strength Net debt/equity (%) 289.690 103.4) (5.749) (3.108 6.771 Invested capital 29.891 Movement in cash 198 15.494 Operating invested capital 22.305 (963) (938) (940) Net cash flow (8.727) (6.324) Net acquisitions & disposals (228) (276) 0 0 0 Dividends paid (358) (322) 0 (280) (415) Non recurring cash flows 745 1.9 35.768 44.panlv.1 * Pre exceptional.1 EV/EBITDA @ target price (x) ** 24.3 22.851 9.5 6.6 Reported P/E (x) 100.086 6.37) (1.4 1.2 3.2) 2.656 2.072 54.591) (22.132 11.7 Recurring P/E @ target price (x) * 138.400 0 Debt finance 6.865 2. pre-goodwill and fully diluted ** EBITDA includes associate income and recurring non-operating income Sources: China Longyuan.749 76.75) (2.889 34.959 9.0 14.7 0.219 32.603) (16.559 48.7 9.960) Short term debt 4.53 4.764) (12.403) 12.995) (10.267 Depreciation 1.291 37.6 CF interest cover (x) 4.153 Recurring cash flow 2.0) (5.8 24.8 1.9 39.124 91.0 1.0 40.476 16.875 21.0 6.76 4.475 1.9) Price/book (x) 8.686 17.1 27.4 Price/tangible book (x) (28.735 2.0 18.000 73.591 11.109 7.528 6.8 1.6 2.500) (21.7 P/CF (x) 13.944 95.395 2.5 0.951 17.7 5.083 1.8 72.083 1.184) (22.474 5.01) (1. 渐飞研究报告 .500) (21.719 1.754 * includes convertibles and preferred stock which is being treated as debt Per share (RMB) Book value per share 0.780 5.886) Tangible fixed assets 24.1 10.372 3.3 91.697 2.219 Net debt 20.233) (3.net DAISY ZHANG.346 Deferred tax 23 45 45 45 45 Other liabilities 50 50 50 50 50 Total equity 3.754 Cash & equivalents (1.555) (16.293) (8.31 3.24 FCF to equity per share (1.4 9.312 33.417) (8.548 Invested capital 29.320 Other non-cash items 878 976 1.518) (11.497 Minority interests 3.908 2.540 1.102 Working capital liabilities (4.667 4.5 Valuation 2008A 2009A 2010E 2011E 2012E Recurring P/E (x) * 100.087 38.087 23.5 116.3 22.757 40.680) Equity finance 1.155 (789) Per share (RMB) Recurring cash flow per share 0.15) Balance Sheet (RMB m) Year Ending Dec 2008A 2009A 2010E 2011E 2012E Working capital assets 3. BNP Paribas estimates 11 4 BNP PARIBAS .198 3.7 Dividend yield (%) 1.083 6.3 6.305 57.http://bg.0 12.4 53.686 3.80 0.500) Free cash flow to equity (8.2 25.26 3.9 Current ratio (x) 0.93 1.4 30.219 21.608 Goodwill 0 0 0 0 0 Other intangible assets 5.522 4.605) (7.900 23.111 Change in working capital 317 (23) 509 68 65 Capex .5 1.065 Other assets 712 2.50 0.85 Tangible book value per share (0.325 3.032) (12.514 0 14.590 2.24) 3.0 0.18 4.715 34.9 1.311 Investments 1.300) (10.219 26.100) (15.354 64.894 2.224 1.768 44.5 8.355 64.393) (15.5 0.78 4.9) (2.645 43.944 84.9 39.087 31.5 7.123 9.747) (21.1 0.6 29.937 7.7 EV/EBITDA (x) ** 21. CFA CHINA LONGYUAN 28 OCTOBER 2010 China Longyuan Cash Flow (RMB m) Year Ending Dec 2008A 2009A 2010E 2011E 2012E Recurring net profit 337 894 1.604) (11.9) (3.0 18.1 27.944 84.7 9.690 103.345 16.987) Net working capital (1.1 Net debt/total assets (%) 56.02 1.383 9.2 1.maintenance 0 0 0 0 0 Capex – new investment (11.819) (3.505 (6.994) (13.5 63.

50 Rel to MSCI China 10 total consolidated capacity. hydro power accounted for 36% of the 2.0 Industry Company in its coal-fired electricity projects under construction. while its operating profit recorded 69% of the total. Currently. all projects are running smoothly.1 4.6 0.5) attributed to China Power’s high.3 China Power currently has Sichuan Fuxi Power and Guangzhou Lixin Free float (%) 31.6 In 1H10. Market Recs.14 ƒ Consolidation of Wuling Hydro improved margins.5 Consolidation of Wuling Power daisy. over ten times higher than the thermal-power business. representing a glorious 45% y-y growth. THIS INFORMATION IS PROVIDED SOLELY . net profit (689) 519 553 2010 surged by 7. Revenue and net Recurring P/E (x) (7. 9 11 1 Strong growth in generation KEY STOCK DATA & CONSENSUS EARNINGS Given the acquisition of Wuling Power YE Dec (RMB m) 2008 2009 2010E and the increasing power demand.800MW.17 ƒ Cost is up. 3. contract-coal portion (over 85%) and Next results April 2011 low default rate (less than 5%).4 10. China Power Int’l 2380 HK NON-RATED CHINA / INDEPENDENT POWER PRODUCERS CLOSE HKD1.7) (26.35/1.http://bg.7) (26.850MW. cold weather and little rainfall led to a 1. However.com Price/book (x) 0.9) 10. but still under control.966MWh compared Recurring EPS (RMB) (0.00 (10) 1.7 0.52 company’s attributable installed capacity accounts for 912MW.00 (30) significant increase in domestic coal demand. EPS 2012 (RMB) 0. the magnitude of such an increase is noticeably Share price performance 1 Month 3 Month 12 Month lower than its peers and below management’s estimate of 14% at the Absolute (%) 1.05% y- y as a result. With Source : Bloomberg respect to the hydro-power projects under construction.panlv.6 drives profit ROE (%) (7. China Power consolidated the Sources : China Power Int’l .1 22.4) national level of 22%.130. Positive Neutral Negative ƒ New power plants under construction.2) beginning of 2010.14 0. 12 28 October 2010 .937 14. Major shareholder China Power Development (39%) These two plants’ total installed capacities are 1. Bloomberg Consensus full period result of Wuling Power for the (HKD) China Power Int'l (%) first time.19) 0.75 WHERE IS THE STREET? A growing hydro giant Consensus Target Price (HKD) 1.8 14. China Revenue 9. EPS 2011 (RMB) 0. This relative victory in coal-cost management can be Relative to country (%) (2.10 with the year-ago period. The unit fuel cost for China Power increased by 10. After the consolidation. of which the 12m high/low (HKD) 2. 2. and the Heimifeng Power Plant with a total installed capacity of 1.2) 5.bnpparibas.597 Power’s net generation in the first half of Rec.zhang@asia.net FOR INFORMATION PURPOSES. CFA +8621 6096 9025 EV/EBITDA (x) 43. Mkt cap (USD m) 8. thus causing the price of Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 coal to climb. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES.7 and 84%.0 2.126MW. WE ARE NOT COMMENTING ON THE INVESTMENT MERIT OF ANY SECURITIES OF THE SUBJECT COMPANY.50 Effective cost management through secure contracts (20) At the beginning of 2010. The operating margin of the hydro-power business in 1H10 was 0 72%.937 New power plants under construction 3m avg daily turnover (USD m) 11.2 (23. Tuokou Power Plant. Daisy Zhang. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. twice the EPS growth (%) (218. respectively.2 4.8) (173. of which the company’s attributable installed capacity accounts for 1.4) (5.632 10. the company has the Baishi Power Plant.6 profit for the company went up by 41% Dividend yield (%) .96 ƒ A strong growth in net generation of 45% y-y in 1H.

CFA CHINA POWER INT’L 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Generation growth: As net generation grew by 45% y-y in the first half. Thermal power recorded an 11% y-y growth. the power generation volume is not as good as we previously expected. Q3: Capacity expansion: What is the planned capacity expansion for the company? And given the company’s initiative to increase hydro-power exposure. 13 2 BNP PARIBAS . Q4: Coal mine integration: To mitigate the risk of the coal-price hike. What is management’s estimate for the full-year power demand? Answers: The extraordinary 45% y-y growth should be largely attributed to the full consolidation of Wuling Power. the outlook for full-year growth appears somewhat optimistic. many IPPs in China are actively looking into the possibility of owning coal mines. How is the company’s progress in terms of coal-mine integration? Answers: We plan to pursue potential upstream integration opportunities at a suitable time. THIS INFORMATION IS PROVIDED SOLELY . NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. For hydro power.500MW.panlv. particularly focusing on the coal mines adjacent to our coal fired power plants.net FOR INFORMATION PURPOSES. we will further develop hydro power resources via the Wuling Platform. To achieve the target . representing another ~30% growth over the current level.http://bg. We are currently negotiating with a very good coal mine within Shanxi province. After the power rationing. we expect the growth in total power generation by the thermal plants to be around 10-11%. what would be the share of hydro power in the total planned capacity? Answers: The company is looking to expand the total installed capacity to 150GW by the end of 2012. The total capacity expansion for hydro power is estimated to be around 1. But the results from the first several days of October showed a clear rebound. DAISY ZHANG. higher than the current 19% level. particularly in the Hunan province and in southwest China. we hope it could reach ~25% share within our total installed capacity. Q2: CDM revenue: What’s the company’s progress for CDM projects and what will be the potential contribution from these CDM projects? Answers: We currently have two CDM projects on small-to-mid size hydro plants registered through NDRC. They are expected to contribute RMB30m-50m revenue per year for the company. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. For the full year.

a grid curtailment problem could temporarily become more serious in certain regions. China Wind Power (CWP) has YE Dec (HKD m) 2008 2009 2010E invested in more than 20 wind farms in Revenue 216 379 989 Beijing.3 9. with a Next results April 2011 total capacity of 566MW. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. 3m avg daily turnover (USD m) 2. 12 of these wind-power plants. CWP’s attributable capacity reached 258MW. In 1H10.3 20. are in operation. a wind-turbine. provided 137 design and consultancy reports.http://bg. CWP has now invested in a total of 22 Absolute (%) (7. In the next two years.9 2.3 CWP also has qualifications in Sources: China Wind Power. net profit 100 117 314 Gansu. Market Recs. CWP constructed 12 projects. WE ARE NOT COMMENTING ON THE INVESTMENT MERIT OF ANY SECURITIES OF THE SUBJECT COMPANY. 14 28 October 2010 .5) attributable capacity of 681MW. 1. with a cumulative capacity of 1. and manufactured 0. ROE (%) 10. At 30 June 2010.4 18. 7 0 0 Full line services in wind power KEY STOCK DATA & CONSENSUS EARNINGS To date.00 20 contracted 13 operating and maintenance projects.3 daisy.6 manufacturing company and a gearbox components manufacturing company.213MW and an Relative to country (%) (10. 0.0) 3.zhang@asia.03 0. repair and maintenance Daisy Zhang.10 Rel to MSCI China 30 2010.02 0.06 ƒ Expanded investment and high income growth.80 WHERE IS THE STREET? Vertical competence Consensus Target Price (HKD) 1.9 (1. CWP owns EPS growth (%) 8. Rec.0 1. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. Hebei and Nanjing with total Recurring EPS (HKD) 0. The company plans to expand and diversify to southern China where grid connection and curtailment are less of an issue. Free float (%) 45.2 companies. CFA companies. More than that. Jilin. Bloomberg Consensus consultation and design for field-of-wind (HKD) China Wind Power (%) power. EPS 2012 (HKD) 0. Positive Neutral Negative ƒ Focusing on on-shore wind farms in near term. Focus on on-shore wind power in the near term CWP plans to add at least 600MW of installed wind-power capacity in 2011 and 2012. Liaoning.panlv. tower-tube +8621 6096 9025 EV/EBITDA (x) 72.6 39.90 10 142 tower tubes. THIS INFORMATION IS PROVIDED SOLELY .70 (10) Expanding investments and high growth 0.2 71. As the projects under Mkt cap (USD m) 762. 10 wind-power plants (total capacity of Share price performance 1 Month 3 Month 12 Month 647MW) were under construction.1 construction will have newer turbines. .6 (30. Inner Mongolia.2) wind-power plants. an 12m high/low (HKD) 1. up 113% from 1H09. the CWP’s consolidated income amounted to HKD349m.0) 116. with much improved performance. professional wind-power plant Dividend yield (%) .net FOR INFORMATION PURPOSES.03/0.3) (5. CWP enlarged its investment in wind-power projects. EPS 2011 (HKD) 0. .65 increase of 153% as compared to 1H09.2 5. The company’s net profit Source : Bloomberg attributable to equity holders was recorded at HKD133m.7 power-project construction and installation Recurring P/E (x) 27.09 ƒ Revenue and profit in 1H10 more than doubled. At 30 June 1.80 0 0. and overall contracting of electric-power projects.com Price/book (x) 1. operations. China Wind Power 182 HK NON-RATED CHINA / INDEPENDENT POWER PRODUCERS CLOSE HKD0.9) (5.08 ƒ Most complete service line within the industry. their returns on investment are expected to be raised.60 (20) In 1H10.04 attributable installed capacity over 250MW.3 Major shareholder China Wind Power Investment (28%) In 1H10.3 and as their construction cost will be lower. and Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 initiated the construction of six wind power plants (total capacity of 297MW).bnpparibas.

5GW. Liaoning. does the company have any near-term or long-term plans to engage in any other type of alternative energy projects? Answers: The Group has already initiated some preliminary engagements including signing of development agreement.panlv.5GW at the end of 2009. the group will participate in off‐shore wind generation and offshore wind power bidding. Q4: Status of the CDM projects: CDM is a hot topic and potentially a revenue generator for the company. This move is considered as the Group’s prospective and farsighted strategic measure. CWP had obtained exclusive wind resources totaling 10. which will require approximately HKD900m (assuming 60% ownership) each year. Q2: Capital requirements: According to CWP’s planned addition of new. What is the current status of the company’s CDM projects’ applications and registrations? Answers: CWP signed contracts for the 17 wind power plant’s CER sales agreement. DAISY ZHANG. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. CFA CHINA WIND POWER 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Wind farm resource reserve: To fully capitalize on the growth potential of the wind-power sector in China. securing as much wind-power resource as possible is important to the long-term development of the company. We believe the CWP’s fundamentals will remain solid for at least the next 2-3 years.net FOR INFORMATION PURPOSES. and feasibility study on wind/solar hybrid generation for solar power generation projects in Gansu.http://bg. solar test. THIS INFORMATION IS PROVIDED SOLELY . 15 of which have obtained approval from the National Development and Reform Commission. and Jilin. wind-power plants. 15 2 BNP PARIBAS . Q3: Initiatives other than wind power: In addition to the company’s near-term focus on on-shore wind-power projects. which is higher than 9. At the end of 1H10. Inner Mongolia. and six projects have secured registration with the United Nations. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. how much investment is required in the coming years? Answers: CWP plans to add at least 600MW installed wind power capacity in 2012. What progress was made last year in terms of wind-power resources? Answers: CWP has enhanced its strength in order to secure as many quality wind resources as possible. In addition.

two phases in Gansu were operating 0. WE ARE NOT COMMENTING ON THE INVESTMENT MERIT OF ANY SECURITIES OF THE SUBJECT COMPANY.4 12. which contributed to the growth of CNPE in 1H10. Free float (%) 44 Major shareholder China Power New Energy Ltd (28%) CPNE’s profit for the period was approximately RMB152m (1H09: 12m high/low (HKD) 1. Hydro-electric 0.00 Rel to MSCI China 100 0.50 0 power: Plants in Shouning and Zhangping of Fujian Province are in 0.048 China including wind-power generation. Meanwhile.zhang@asia. Bright outlook for alternative energy In November 2009.80 60 Wind power: By 30 June 2010. Another two news projects in Gansu.6 44.21m (1H09: RMB493.6 approximately RMB809. the sale of clean-energy. one project in Shanghai. 6 0 0 Focus on clean energy KEY STOCK DATA & CONSENSUS EARNINGS C P New Energy (CPNE) develops and YE Dec (HKD m) 2008 2009 2010E operates clean-energy power plants in Revenue 952 1.0 investment holdings in the clean-energy power industry.net FOR INFORMATION PURPOSES.http://bg.2 79.90 80 Diversified portfolio in clean energy 0.7 mainly situated in Guangdong.panlv.8 16.13 ƒ Clear focus on clean energy. the Kunming plant is under trial and the Haikou plant is under construction. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. EPS 2011 (HKD) 0.1 Power Grid. We believe this momentum will persist.569. Positive Neutral Negative ƒ Government initiatives support future growth.007). Sources : C P New Energy .40 (20) operation.039 power generation.9 For 1H10. CFA EV/EBITDA (x) 38. Basic EPS was approximately RMB0.3 5. Fujian and Recurring P/E (x) 600. the government has continued to improve the structure of the nation’s energy consumption with strong emphasis on development of new energy forms and renewable energy. Waste-to-energy-power generation: Plants in Dongguan and Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Deqing of Guangdong Province are in operation.3 1. 28 October 2010 . .0 Gansu. 0. the growth of which was primarily attributed to the increase in volume of electricity sold. Bloomberg Consensus power-generating equipment and property (HKD) C P New Energy (%) investments.1) 38. These plants are EPS growth (%) (109. net profit 7 153 300 hydro-power generation.78 WHERE IS THE STREET? All-around in green arena Consensus Target Price (HKD) 1.001 0.49 RMB66m) and the company’s recorded profit attributable to equity Source : Bloomberg holders amounted to approximately RMB126m (1H09: RMB50m).3) 1. Biomass power Share price performance 1 Month 3 Month 12 Month generation: The Zhongdian Hongze plant is in operation.6) (7.580 2.70 40 smoothly.08 ƒ Turnover and net profit doubled in 1H10.022 0.3 China Power Grid and the Northwest +8621 6096 9025 daisy. 16 . Rec.60 20 and two projects in Heilongjiang are under construction. CPNE is also engaged in ROE (%) 0. EPS 2012 (HKD) 0. . sold to the Southern Power Grid.2 1. the group recorded revenue and tariff adjustments of 3m avg daily turnover (USD m) 3. and the electricity generated is Dividend yield (%) .2 Next results March 2011 Revenue and profit double in 1H10 Mkt cap (USD m) 715. the Chinese government had announced the initiative to increase the use of non-fossil energy to account for nearly 15% of its one-off energy consumption by 2020.3 3. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES.0 35. Natural gas Absolute (%) 0. waste-to-energy- Recurring EPS (HKD) 0.com Price/book (x) 1. etc.05 ƒ Diversified new energy plants across China. THIS INFORMATION IS PROVIDED SOLELY .91m). Relative to country (%) (3. the East Daisy Zhang. Market Recs.bnpparibas. natural gas and oil- power generation.02/0.4 power generation: The Dongguan plant is in operation. 1. C P New Energy 735 HK NON-RATED CHINA / INDEPENDENT POWER PRODUCERS CLOSE HKD0.018 (1H09: RMB0.9 20.0 2.

Q3: Grid connection: A considerable portion of CPNE’s wind power asset will be located in Gansu province. For this year and the next. which became fully operational in 1H10. rainfall along Minjiang (where CPNE's largest hydro plant – Shaxikou plant – is located) and Tingjiang is 20-40% more than the previous years.panlv. 300MW would be in Gansu and 100MW in Heilongjiang. What is the main driver behind this growth? Answers: Heavy rains in Fujian lead to improved operating efficiency of hydropower. precipitation in Fujian since the beginning of this year is 28% more than the previous years or 60% higher than last year. the Donghai project) in Shanghai. is one of the five largest power generators in China. where water resource is rich. we expect CPNE's hydropower plants to post strong utilisation recovery of nearly 30% y-y this year. we witnessed significant growth in generation from CPNE’s hydro-power plants. THIS INFORMATION IS PROVIDED SOLELY . They are expected to be commissioned in late 2010E or early 2011E. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. 17 2 BNP PARIBAS . Wind projects of an aggregate 400MW are under construction. At present. CPNE plans to expand its power portfolio in China with total installed capacity reaching 2GW by 2011E. Capacity contribution of wind energy to exceed 50% in 2011E. So. CFA C P NEW ENERGY 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Support from the parent group: The parent company. Will grid connection be the bottle neck for those assets to generate revenue for CPNE? Answers: With Gansu being one of the seven 10GW level wind energy bases. apart from operating two onshore wind projects of 150MW in Gansu. However. Specifically. Wind and hydropower capacities are estimated at 1GW and 10GW. This implies total installed capacity CAGR of 41% in 2010-11E. its hydropower performed badly in 2009 due to drought. it holds 24% stake in the country's first large-scale offshore wind project (i. China Power International. Aside from asset injections of some of its initial portfolio from the CPI group since late 2006. the Gansu Electric Power Corp is keen to upgrade its grid connection technology to resolve the grid bottleneck problem in the province.e. which had about 20GW clean energy capacity by end-2009. DAISY ZHANG. up significantly from 1GW in 2009. Of which. All of CPNE's hydropower plants are located in Fujian. CPNE expects to raise the capacity contribution of wind energy from 15% in 2009 to 52% by 2011E. the focus will be to develop wind energy as it is the most cost competitive renewable energy source. This in turn allows higher penetration of heavily fluctuating wind energy in the grid system. CPNE will pursue growth through acquisitions from CPI.net FOR INFORMATION PURPOSES. In contrast to last year. CPNE has recently acquired the remaining 10% interest in phase 1 of Jiuquan project in Gansu from CPI at nil consideration. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. parental asset injections or acquisitions from third parties. it can control load flow and grid voltage stability. Apart from the building of the above-mentioned 750KW grid line. With the ability to optimize the rate of change of power output due to change in wind speed. Q4: Hydro power growth: For 1H10.http://bg. Can we expect any support from the parent company? Answers: Apart from organic growth and acquisitions from independent third parties. Q2: Capacity expansion: What’s the company’s plan regarding capacity expansion in the next few years? And what is the mix that can be expected across different types of technologies? Answers: Through organic growth. the provincial power grid company has recently joined with State Grid Power Research Institute to develop China's first active power intelligent control system for ensuring power grid system stability. The system has been in operation since mid March 2010. respectively. This was done to gain a better control over this project.

33 (0. BUY We maintain Datang Power as BUY with a TP of HKD3.00 (36) tonnes of its final product.48-1. and the Absolute (%) (2.000/tonne. and 0.23 In 1H10. 渐飞研究报告 . Relative to country (%) (10.161 62.5 15. the coal segment contributed Prior rec. Sources: Bloomberg consensus.0 0. We estimate the coal segment will contribute Chg.2) (13. 2. and 4. net profit 1.0 17.http://bg.412 3. and waster water (86g/kWh) are far below national average levels.65 991 HK PRIOR TP CLOSE HKD3.18 0.65 HKD3.15 4.8 7.22 (18.panlv.com Net debt/Equity 244.4% UNCHANGED HOW WE DIFFER FROM THE STREET ADR TICKER: DIPGY US NEW INFORMATION BNP Consensus % Diff Target Price (HKD) EPS 2010 (RMB) 3.com (HKD) Datang Int'l Power (%) coal-gas project indicated that Rel to MSCI China construction at both projects is proceeding on schedule. 18 28 October 2010 . Share price performance 1 Month 3 Month 12 Month The Keqi coal-gas project commenced construction last August.15 0.9) 0.bnpparibas. CFA Price/book (x) 1.46m 2. Baoli.233 60.65.000-12. Market Recs. Tashan and Yuzhou Dividend yield (%) 2.cheng@asia. EPS (RMB) 0.16 BUY CHINA / INDEPENDENT POWER PRODUCERS UP/DOWNSIDE +15. polypropylene.2 the company has achieved a 100% desulphurisation facility installation ADR ticker DIPGY US rate.zhang@asia. nitrogen oxides (1.8 230.9) (24.13g/kWh). the total cost for polypropylene is RMB6.6 (16.9x P/BV. 15.9 Coal chemical and coal-gas +8621 6096 9025 daisy. smoke ash (0. as we estimate a more-than 30% earnings contribution from the non-power segment in 2011-12 and believe the current 2011E valuations.37m tonnes. including transportation. KEY STOCK DATA ƒ Leader in energy savings and emission reduction.1 259. The current ASP of natural Mkt cap (USD m) 11.41g/kWh).1 26. 3m historic vol. which will be transmitted to Beijing. 26 October 2010) 8.800/tonne.78 energy savings and emission reductions.0 0. The company claims that its emission rates for sulphur dioxide ADR closing price (USD. 0.3b.9 0. YE Dec (RMB m) 2010E 2011E 2012E Revenue 54.46g/kWh).5 Our site visits in August to the Datang’s +8621 6096 9029 Duolun coal chemical project and the Keqi Alvin.0x P/E and 0.904 2.0 More than power EPS 2011 (RMB) 0.164 gas is RMB1.9 9.0b cubic metres of gas over Next results March 2011 2012-14. Positive Neutral Negative ƒ Coal chemical project development right on track.23 25% to the company’s total profit. In its coal-fired generating units.043 the growth engine Recurring EPS (RMB) 0.88/cubic metre. 7 15 4 ƒ Coal gas project to offer future upside.1 0.bnpparibas.4) We expect it to produce 1. are really attractive.730 Coal mining business to become Rec.0 about 30% of profit in 2011-12.2) ƒ Coal mining business to become the growth engine.65 0. We estimate the total production cost is around RMB1. BNP Paribas estimates Resuming growth with attractive valuations. (%) 0.5 Free float (%) 66 Leader in energy savings and emission reduction Major shareholder China Datang Corporation (34%) Datang is one of the IPPs that are demonstrating a strong focus on 12m high/low (HKD) 3. 3m avg daily turnover (USD m) 12.9 0.7b. EV/EBITDA (x) 9. (6) 4.48 0.27/cubic metre.net Datang Int'l Power TARGET HKD3.15 0.9) installation of air separation and gasification facilities has been finalized. The current ASP of polypropylene is RMB11.6 3.18 0.15 3.28m tonnes.00 (16) The Duolun project is still under construction and the company expects it to start producing the final product by the end of this year.3 9.2 back of increasing coal production from Recurring P/E (x) 17.9 the Shengli II.93/2.0 7.00 (26) coal-chemical project to deliver 0.9 projects to offer future upside Alvin H Cheng ROE (%) 6. (%) 28. on the EPS growth (%) 13. over 2011-12.18 0.0 3. In EPS est.3 Daisy Zhang.h. We expect this 3. According to Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 management.8 coal mines.0 11.

We have set a target of 40% self sufficient rate in 2015. 渐飞研究报告 . Alternative energy is needed for China. Q3: Nuclear power plants: What’s the progress on the construction of the nuclear power plants under Datang? Answer: During 1H10. In 1H10. the total coal production reached 80m tons. On February. As such. Q5: Conflict between alternative and traditional energy: As China is putting more and more efforts to develop nuclear power. which will break away the monopoly of coal sectors in coal pricing. can we expect easing of the ratio in the near term? Answer: In 1H10. Q2: High gearing: The net gearing of Datang is high. In addition. However. What’s the possibility of another round of price hike in coal in the 2H10? Answer: In 1H10. The self sufficient ratio of coal and coal production of IPPs will increase in the rest of the year. For nuclear power. hydro power and other renewable energy. will they be a potential threat to the future of coal power business. the nuclear island of unit 1 of Ningde Nuclear Project has finalized construction and entered the installation period. biomass or other type of new energy is still very limited compared to coal. we expect flat to moderate increase in the 2H10.panlv. The nuclear island of unit 2 is under construction. we estimate its net gearing ratio to improve in 2011. solar. far below its previous full- year 2010 target of RMB21b.http://bg. but also for the environment and sustainable growth in the long run. 19 2 BNP PARIBAS . Answer: We do not expect the alternative energy to threat the coal power business. The increase in railway capacity will also help ease bottlenecks in domestic coal transportation. CFA DATANG INT'L POWER 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Coal price: Coal price increases during 1H10 dragged the performance of the IPPs significantly in the first half. Q4: Self sufficient rate: Datang has been active in coal mining business. the unit 3 started construction.74/share (140% premium to the current H share price). due to lack of a driving force. the company aims to complete its second share placement. coal demand will subside in 2H10. at no less than RMB6.7b. So we believe coal power is still indispensable to China. What is the current self sufficient rate for Datang and with current plan. China has to rely on imports of nuclear fuel. Datang Power’s capex was RMB8. of no more than 1b non-public ‘A’ shares. domestic spot coal price recorded a significant increase. But China still needs coal in the foreseeable future.net DAISY ZHANG. emission reductions and holding back heavy industries. As a result of government policy toward encouraging energy savings. The generation capacity of wind. what is the outlook for the ratio in future? Answer: Total coal production reached 66m tonnes in 2009 with self sufficient rate at 20%. not only from the business perspective.

1 4.818 14.805) Gross profit ex depreciation 12.612) (4.5 22.231 3. 渐飞研究报告 .144 6.3 76.703 0 0 0 0 0 0 0 0 0 0 Sources: Datang Int'l Power.692) (2.0 25.0 170.043 44.9 Operating EBIT margin (%) 7.593 Transportation service fees 0 0 0 0 0 Sales of materials 0 199 2.8 7.7 6.8 18.4 25.0 4.4 125.6 13.6 16.2 Reported EPS (%) (79.11 0.0 12.990 42.panlv.491 Depreciation (6.23 Reported EPS 0.1 26.233 60.0) 114.275 6.14 0.9) (3.18 0.06 0.8 3.0 4.659) (1.5 94.0 Interest cover (x) 1.9 4.161) (38.593) (9.0 ROIC – WACC (%) (4.1 6.412 3.1 14.08 0.5 57.0 2.892 6.7) (3.6 13.6 29.9) (2.1 18.6 Operating ROIC (%) 2.092 21.8 23.4 (5.340) (1.4 Inventory days 23.6 Operating EBITDA margin (%) 24.141) (39.7 29.9 Operating ROIC – WACC (%) (5.0 3.1 26.7 5.3 22.15 0.6 (3.900 47.1) (2.2 Operating EBIT (%) (63.000 23.07 0.1 3.0 18.14 0.8 1.592 2.206) (7.9 4.744 20.3 53.943 54.768 segment contribution to Net financing costs (3. BNP Paribas estimates 20 3 BNP PARIBAS .5) 133.0 7.0) 7.904 2.5 4.3 Operating EBITDA (%) (29.199 49.202 7.8 14.7 * Pre exceptional.077) (4.199) (34.507) (6.4 3.9 Debtor days 67.878 Heat 220 383 460 506 556 Others 304 174 500 0 0 Sale of coal 385 5.205) (6.9) (3.730 Cost of sales ex depreciation (24.8 3.904 2.0) 7.0 Dividend payout on recurring profit (%) 172.0 12.072 Minority interests 221 (980) (1.9 Creditor days 172.220 3.161 62.http://bg.9 3.043 Non recurring items & goodwill (net) 0 0 0 0 0 Recurring net profit 749 1.744 7.763 Tax (72) (639) (653) (1.985) Associates 371 409 742 816 979 boost associate income Recurring non operating income 949 155 0 0 0 Non recurring items 0 0 0 0 0 Profit before tax 600 3.309) (4.0 4.8 91.4 15.1) (2.9 53.2 Operating performance Gross margin inc depreciation (%) 16.5 24.029) Preferred dividends 0 0 0 0 0 Other items 0 0 0 0 0 Reported net profit 749 1.07 0.5 77.18 0.608) (2. pre-goodwill and fully diluted Revenue By Division (RMB m) 2008A 2009A 2010E 2011E 2012E Electricity 35.2 12.7) (3.4 Net margin (%) 2.800 3.274) (6.251 13.043 Per share (RMB) Recurring EPS * 0.0 25.407 18.4 45.net DAISY ZHANG.9 Recurring EPS (%) (79.7 5.903 7.5 ROA (%) 3.691) Profit after tax 528 2.240) (7.9 4.1 10.433) Operating EBITDA 9.578 7.359 6.7 25.2 1.723) Goodwill amortisation 0 0 0 0 0 We estimate coal Operating EBIT 2.8) (2.9 Effective tax rate (%) 12.10 Growth Revenue (%) 12.1) 56.533 50.071) (1.0 45.9) ROIC (%) 3.15 0.23 DPS 0.612 1.098 14.0 19.0 3.0 17.0 45.6 27.925 Other operating income 0 0 0 0 0 Operating costs (3.8) ROE (%) 2.4 25.0 4. CFA DATANG INT'L POWER 28 OCTOBER 2010 FINANCIAL STATEMENTS Datang Int'l Power Profit and Loss (RMB m) Year Ending Dec 2008A 2009A 2010E 2011E 2012E Revenue 36.0 17.975 4.020 5.06 0.492) (6.612 1.412 3.0) 114.795 17.493) (29.628 5.9 13.

592) (1.97 1.161 3.8 230.173 11.328 11.117) (21.590 227.010) 1.650 7.036 Change in working capital 3.840 11.860 87.9 Recurring P/E @ target price (x) * 49.9 244.7 48.933) 31.221 Recurring cash flow 9.031 2.507 6.0 1.3 1.092 1.13 FCF to equity per share (1.70) Balance Sheet (RMB m) Year Ending Dec 2008A 2009A 2010E 2011E 2012E Working capital assets 10.0 11.304) (5.778 12.860 Long term debt * 69.350 160.8 42.7 2.049 Other non-cash items 3.8 2.291) (10.3 0.2 Current ratio (x) 0.686 38.257 36.5) (3.654 6.165 2.1 22.9) Price/book (x) 1.6 8.5 9.176) (27.2 0.662) (6.373 Invested capital 129.233) (970) (970) (970) Net cash flow (21. BNP Paribas estimates 21 4 BNP PARIBAS .4 47.720) (20.308) Tangible fixed assets 134. CFA DATANG INT'L POWER 28 OCTOBER 2010 Datang Int'l Power Cash Flow (RMB m) Year Ending Dec 2008A 2009A 2010E 2011E 2012E Recurring net profit 749 1.114 Investments 4.1 4.5 15.268) 52.055 Total equity 26.652) (8.15 Tangible book value per share 1.252 26.590 227.9 0.254) Equity finance 198 2.123 2.059 Goodwill 2.5 19.397 10.0 0.506) (17.123 Other intangible assets 1.881 Minority interests 4.4 0.206 7.5 19.412 3.503 36.417 (5.net DAISY ZHANG.5) (4.9 8.0 3.604 19.3 2.04 0.22 2.2 17.820 156.12 1.9 63.377) (21.825) (19.001 168.323 14.988 209.972 * includes convertibles and preferred stock which is being treated as debt Per share (RMB) Book value per share 2.175) (10.545 14.367 Operating invested capital 121.123 2.569 91.502) (1.455 4.9 20.523 160.maintenance 0 0 0 0 0 Capex – new investment (33.752 204.8 P/CF (x) 3.551) (15.4 2.7 9.369) 62.6 2.646 50.255) (9.5 CF interest cover (x) 4.9 7.892 178.860 84.357 Invested capital 129.711) (4.9 Net debt/total assets (%) 58.123 2.56 2.735 Per share (RMB) Recurring cash flow per share 0.456 15.972 Cash & equivalents (5.838 41.1 0.393 7.9 Valuation 2008A 2009A 2010E 2011E 2012E Recurring P/E (x) * 42.8 17.967) Free cash flow to equity (20.92 3.952) (43.275 (7.597) Net working capital (13.9 9.573 110.145 12.6) (3.1 259.463 1.8 * Pre exceptional.211) (11.820 138.9 Dividend yield (%) 4.988 209.806 31.403) Capex .911 94.078) (1.430 188.007 11.159 149.06 2.687 2.3 0.004 3.81) (0.303 Other assets 841 984 5.5 15.507 42.652 (2.5 2.4 P/FCF (x) (1.8 17.7 0.525 13.3 EV/EBITDA @ target price (x) ** 10.2 1.569 65.749 9.5 4.23 2.733) Short term debt 29.599 3.3 9.198 29.75 Financial strength Net debt/equity (%) 302.240 7.6) (1.347 Deferred tax 396 324 362 347 332 Other liabilities 4.026 99.7 Reported P/E (x) 42.http://bg.093) (5.365) (7.028 6.0 EV/EBITDA (x) ** 11.73) (1.59) (0. pre-goodwill and fully diluted ** EBITDA includes associate income and recurring non-operating income Sources: Datang Int'l Power.1 1.2 1.888 15.612 1.4 1.6 3.277 421 Debt finance 32.41 2.440) (8.043 Depreciation 6.892 178.289 Working capital liabilities (24.680 (2.81 1.90 2.551) (22.793 4.523 160.4 1.567 Movement in cash 11.862 (6.552 117.723 Associates & minorities (591) 571 329 792 1.7 0.593 9.219 Net debt 93.8 EV/invested capital (x) 1.3 13.676 49.701) (16.9 Price/tangible book (x) 1.0 11.325) (22.334) Net acquisitions & disposals 553 158 50 50 50 Dividends paid 0 0 0 0 0 Non recurring cash flows (1.94 1.263 4.77) (0.734 194.panlv.0 9.1 2.500) (21.721 9.463 208.904 2. 渐飞研究报告 .7 357.170 9.2 9.305 2.

23 ƒ Pipeline construction income remains healthy and accountable. gas connection fee revenue ROE (%) 15. 10 (20) Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Gas sales soared For 1H10. respectively. The new piped natural gas connections made to 20 20 residential households and the designed daily capacity for C/I customers. Revenue and net profit in 1H10 came in at RMB5.5% and 70. 12m high/low (HKD) 25. among which ENN Energy will be the first to begin operation in the most economically developed cities. Major shareholder Xinao Group Int’l (31%) As a result. 15 4 0 Strong growth in 1H10 KEY STOCK DATA & CONSENSUS EARNINGS ENN Energy’s (formerly known as Xin’ao YE Dec (RMB m) 2008 2009 2010E Gas) main business portfolio consists of Revenue 8.4 Pipeline construction maintains +8621 6096 9025 healthy momentum daisy. LPG and vehicle Rec.2 26.6 reached RMB1. contributing to 71.8 24.0 3.113 sales revenue has increased significantly to become the major source of 3m avg daily turnover (USD m) 6. CFA EV/EBITDA (x) 20.6% and Recurring P/E (x) 31.3 29. newly installed during 1H10.041m.0 1. EPS 2012 (RMB) 1.8 17.7 25.3 gas continue to accelerate.5 42.2 35. As compared with the percentage of 54.3% of the total revenue in Next results March 2011 aggregate.0 18. Ho Chi Minh and Da Nang. The average connection fees for 30 Rel to MSCI China 60 residential households and C/I (commercial/industrial) customers were RMB2.66 Source : Bloomberg Tapping into international markets In the first half of the year. ENN Energy 2688 HK NON-RATED CHINA / GAS UTILITIES CLOSE HKD23. WE ARE NOT COMMENTING ON THE INVESTMENT MERIT OF ANY SECURITIES OF THE SUBJECT COMPANY.7 4.78 1. gas Mkt cap (USD m) 3. an increase of Sources: ENN Energy .44 ƒ Gas sales becoming even more important for Xin’ao Gas.2% of the total group revenue.4 During 1H10. THIS INFORMATION IS PROVIDED SOLELY .8 1. gas sales to vehicles increased 39.3 15.7% over the corresponding period last year and Absolute (%) 2.02 distribution.6 revenue for the company. remaining at a similar 25 40 level to last year. 22 28 October 2010 .panlv.com Price/book (x) 4. Bloomberg Consensus 7. Sales of piped gas and vehicle Relative to country (%) (1.6 11. The number of vehicle gas refuelling stations also increased from 141 to 176 compared with the same period last year. Dividend yield (%) 0.0 RMB533m. EPS 2011 (RMB) 1. net profit 631 801 1.00 WHERE IS THE STREET? Steady and healthy growth Consensus Target Price (HKD) 24. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. Positive Neutral Negative ƒ Penetration into the overseas market offers further upside. The company’s joint venture in Vietnam has obtained rights to operate piped natural gas projects in every city in Vietnam. respectively.6 19. representing 25.3 Daisy Zhang.5% in 1H09. piped gas sales revenue reached RMB3.610 and RMB150 (per m3).2% compared to1H09. and such cooperation is the prelude to breaking into the international market by the company.zhang@asia. including Hanoi. Free float (%) 69 while the number of refuelling stations that are under construction was 30.http://bg.net FOR INFORMATION PURPOSES.1 accounting for 60.3% of the total revenue.bnpparibas. increased by 19.266 8. 15 0 compared to the corresponding period last year. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH.3%. As an emerging market. Market Recs.413 10.40 ƒ Strong revenue and profit growth in 1H10.5% y-y growth.080 refuelling gas (CNG. the company formally established business cooperation with The Vietnam Oil and Gas Group (PetroVietnam) to develop piped gas and vehicle gas refuelling businesses in the near future. representing Share price performance 1 Month 3 Month 12 Month an increase of 69.4) 14. Vietnam offers a huge development potential and considerable growth rate.0 31.63 0.044m and EPS growth (%) 21.273m.6% over 1H09 and accounting for (HKD) ENN Energy (%) 25.248 city pipeline natural gas.80/13. LPG and DME) Recurring EPS (RMB) 0.

Q3: Geographical selection for new projects: Reviewing the new piped gas projects of the company in 1H10. CFA ENN ENERGY 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Dipping gross margin: Overall gross margin and net profit margin in 1H10 were 28. Q2: Improving net margin: The net margin (before minority interest) has increased to 13. THIS INFORMATION IS PROVIDED SOLELY . mineral processing. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. sound financial management by the group was another factor for the increase in net profit margin. the low gas penetration rate not only shows that the group is still at a rapid development stage.8% in 1H10 from 12. The group has raised USD150m syndicated loan at the end of 2009 which was mainly used for repaying the short-term loans in China. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. chemical. Q4: Penetration of gas connections: What is the current gas connection penetration of the projects owned by ENN Energy? What’s the potential growth of the penetration rate? Answers: Given the group’s strategy of acquiring projects with low gas penetration rates. Although gross margin has dropped. ENN Energy’s earnings quality is improving. the share of results of jointly controlled entities increased by 67. the overall gas penetration rate of the group’s China projects is 33. one-off loss and impairment of fixed assets have also played a significant role.3% in 1H09. The pillar industries in Huadu included automobile. and all these industries have played a significant role in boosting the gas sales of the group.5% as compared to the corresponding period last year. the gas penetration rates can reach as high as 80% to 90%. the proportion of total revenue from lower margin recurring gas sales revenue has increased. From the group’s past experience. textile.http://bg. apart from effective cost controls maintained by the group.6% as compared to the corresponding period last year.net FOR INFORMATION PURPOSES. paper-making and machining. the finance costs of the group decreased by 13.870 in 2008. but also ensures good revenue in the future. in particular. due to increased reliance on recurring income. However.2% compared with 30. What’s the major issue behind such a decline in profitability? Answers: The gross margin drop was mainly due to a dip in the proportion of revenue from higher margin one-off connection fee. which in turn provides a good foundation for the group’s profits and cash flows. port economy and jewellery. why is the net margin increasing? Answers: As for the increase in net profit margin.5% in 1H09. Moreover. with particularly robust industries including electronics. Such syndicated loan bears interest at a rate much lower than the lending rate in China.panlv. the gross domestic product per capita in the Guangzhou Huadu District in Guangdong Province reached RMB66. 23 2 BNP PARIBAS . the substantial decrease in provision for bad debts. The other six projects in the Guangdong province are also especially well-developed in both industrial and commercial sectors. In view of the huge number of connectable but not yet connected population under the coverage of the group’s projects which have obtained exclusive operational rights. DAISY ZHANG. On the other hand. as of 30 June 2010. During the period. in light of the further growth in the business of the group.9% only. we saw a high concentration in the Guangdong province (seven out of 10 projects). Why does the group place such an emphasis in Guangdong province? Answers: The commercial and industrial development in these project cities in China are relatively robust. significantly above the national average.

77 ƒ Alternative energy flagship of HKC after asset injection.11) (0. the wind-farm projects in Mudanjiang and Muling of Heilongjiang province and Siziwang Qi of Inner Mongolia will be majority and wholly owned by HKE.8 partnership with CECEP for projects in Hebei and Gansu (over 500MW Relative to country (%) 15.05 ƒ Partnership with CECEP expected to be beneficial. 0.1 injecting its 261MW wind-power business daisy. Following the acquisition. Currently. energy- Recurring P/E (x) (6. bringing it to 2. wind-power resource across China. Market Recs. after acquisition. Hong Kong Energy 987 HK NON-RATED CHINA / INDEPENDENT POWER PRODUCERS CLOSE HKD0.net FOR INFORMATION PURPOSES.8 0.zhang@asia. 20 Heilongjiang and Inner Mongolia. Positive Neutral Negative ƒ 2000MW capacity to be added in the next five years.3) (88.87/0.03 (HKC). 24 28 October 2010 .4) (366. Free float (%) 35.08 ƒ Contribution from alternative energy on the way. With CECEP’s Next results March 2011 favorable background with the government and its large amount of Mkt cap (USD m) 72. .7 (0. announced on 12 May 2010 and approved by shareholders on 26 July 2010.bnpparibas.4) 20.40 (20) (CECEP.com Price/book (x) 1.panlv. but be prepared Major shareholder HKC Holdings Ltd (51%) The company’s current turnover came solely from the software business.2 Meaningful profit yet to come.90 Rel to MSCI China 40 The group was one of the first movers in wind farms and has since grown 0. Bloomberg Consensus entered the wind power business in 2005 (HKD) Hong Kong Energy (%) when it established its Mudanjiang wind farm in Heilongjiang province. EPS 2012 (HKD) 0.2 capacity in total). It is expected that these assets will start making a revenue contribution to the group in the 2H10. HKE has entered into a Absolute (%) 20. HKC is Daisy Zhang. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES.80 30 its portfolio to 341MW of attributable capacity covering Hebei. 12m high/low (HKD) 0. EPS 2011 (HKD) 0.9) HKE into a key alternative.9 and a 10MW waste-to-energy plant into ROE (%) 14 11 170 HKE at a 25% discount to fair value for HKD1. 2 0 0 Alternative energy platform of KEY STOCK DATA & CONSENSUS EARNINGS HKC YE Dec (HKD m) 2008 2009 2010E On 26 July 2010.0 10. HKC/HKE Sources: Hong Kong Enerrgy. As a group.4) 2.60 0 A beneficial partnership with CECEP 0.7) 7. As proposed in Dividend yield (%) .2) (53.8 1. Gansu.http://bg. a significant asset Revenue 14 11 170 injection to Hong Kong Energy (HKE).01) 0.70 10 0. was voted in by independent shareholders. respectively. The group is also expected to benefit from the good performance of a waste-to-energy plant in Linyi of Shandong province as well as wind farms in Danjinghe and Lunaobao of Hebei province and Changma of Gansu province. founded directly by the State Council and Share price performance 1 Month 3 Month 12 Month reporting to the central SASAC.000MW over the next five years. WE ARE NOT COMMENTING ON THE INVESTMENT MERIT OF ANY SECURITIES OF THE SUBJECT COMPANY.8 developable. HKE has also pledged to add to its installed capacity.52 which will no longer be the strategic business focus.0 6. 0. where HKE holds 30-40% stakes. THIS INFORMATION IS PROVIDED SOLELY . This restructuring turned EPS growth (%) (139.2) (17. the partnership is 3m avg daily turnover (USD m) 0. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. and does not reflect Source : Bloomberg the major developments in wind power.0 platform business of HKC.50 (10) The China Energy Conservation and Environmental Protection Group 0. Rec.1 expected to benefit HKE. CFA +8621 6096 9025 EV/EBITDA (x) (13. net profit (90) (10) 82 from its parent company HKC Holdings Recurring EPS (HKD) (0. N/A the sale and purchase agreement.66 WHERE IS THE STREET? Prepared with ambition Consensus Target Price (HKD) 0.018m. formerly known as the China Energy Conservation Investment Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Corp or CECIC) is the largest China SOE in energy conservation and environmental protection.

25 2 BNP PARIBAS . 150MW and 100MW. Q3: Generation growth curve: According to the current construction and development plan for HKE. respectively.http://bg. or nearly 4x of the current total of 660MW is scheduled to be operational this year. Q2: Geographical spread: In addition to wind farms in the traditional “Three North” regions and Inner Mongolia. what level of generation volume can be expected for the next years? Answers: Based on the current pipelines. what’s the outlook for the total wind power installed capacity of the company? Answers: HKE claims a high‐quality wind project pipeline that amounts to nearly 2. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. with planned capacity of 167MW. but also allow faster construction of power plants with effective cost control and quality assurance. CFA HONG KONG ENERGY 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Wind power pipeline: With the focus of the company shifting toward wind power in the coming years. Jilin and Liaoning. such as providing EPC. This skew means that the growth of wind power generation could be higher in 2011 and 2012 due to the carryover effect. We currently have pipeline projects in Guangdong. This portends rapid growth and high visibility for a capacity build-up. Q4: Value-chain extension: Can we expect something more than wind farms when the wind-power business reaches certain levels in the long term? Answers: When its wind power business reaches the critical mass level.net FOR INFORMATION PURPOSES.panlv. The projects in the pipeline are currently in different stages of development. we expect HKE’s attributable capacity to rise from 68MW as of end-2009 to 341MW as of end-2010 and 481MW as of end- 2011. The expansion of business scope into these integrated services at various stages of wind power project development could not only expand revenue streams. and preliminary analysis of project information or pre-development. will HKE look into other regions for long-term development? Answers: In addition to our pipeline projects in Inner Mongolia. we are also looking into regions for sustained growth. and operation and maintenance services to its own and third- party projects. We expect generation to rise at a 105% CAGR during 2010-12 on an attributable basis. non-binding MOU signings. THIS INFORMATION IS PROVIDED SOLELY . Of particular note is that 241MW in attributable capacity alone will be commissioned in 2H10. Of these project reserves. Yunnan and Hainan province. HKE may look into other parts of the wind power value chain and other renewable energy businesses. such as negotiations with governments for non-binding MOUs. about 700MW in Inner Mongolia and Jilin will become operational by 2012. DAISY ZHANG. and a large part of the 2011 increment will also be commissioned in the second half. implying a 26% wind power capacity CAGR for 2010-14. HKE targets to ramp up its gross operating capacity to at least 1. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES.660MW in the next five years.6GW.

net profit 59 75 80 now grown into a regional top player Recurring EPS (SGD) 0.50 (10) Municipal projects and MENA underpins growth 2.14 offering a comprehensive suite of services in the water and renewable resources EPS growth (%) 78. the JV’s 12m high/low (SGD) 3.3 desalination.18 ƒ Joint venture with Mitsui to offer capital gain. 3m avg daily turnover (USD m) 2. EPS 2012 (SGD) 0.1m. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. concentration.zhang@asia. Hyflux has Rec. Hyflux’s revenue increased 9% y-y to SGD241.6 1.3 group revenue.5 1. Bloomberg Consensus treatment and membrane bioreactor (SGD) Hyflux Ltd (%) technology and portable water treatment. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. The growth was mainly attributable to the progress of its desalination project in Magtaa. 26 28 October 2010 . The absence of the Libyan projects would be felt in 2011 and 2012.3) (4. Spring China Utility Ltd. Municipal sales continue to be the key driver.3 Hyflux’s water business covers seawater ROE (%) 22. Positive Neutral Negative ƒ Delay in Libyan projects potentially hampers earnings. EPS 2011 (SGD) 0. daisy.9 systems have been installed in more than Dividend yield (%) 1. Gross and net margin in the 1H10 remained at 42% and 14%.bnpparibas. similar to the same period last year. the Share price performance 1 Month 3 Month 12 Month Middle East and North Africa (MENA) region now makes up 77% of total Absolute (%) (0. The renewable resources 4.panlv.6 20. To date. Furthermore.11 0.http://bg. Mkt cap (USD m) 1.2b worth of projects from Libya. With this.00 0 2.68 project portfolio will comprise the four water treatment plants acquired Source : Bloomberg directly from Hyflux’s wholly-owned subsidiary.1 1.8 21.7m while net Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 profit rose 9% y-y to SGD33. wastewater Sources: Hyflux Ltd . 3. Hyflux and Mitsui & Co announced a new proposed 50:50 Major shareholder Ooi Lin Lum (31%) joint venture (JV) called Galaxy Newspring Pte Ltd. enabling the company to bid for new projects. This transaction should be positive for Hyflux because it should recognise about SGD6m in capital gains and receive about SGD71.0) 86% of the total revenue. for USD53.8 0.00 Rel to MSCI Singapore 30 management business explores the utilisation of Hyflux’s membrane technologies in various applications including: separation.net FOR INFORMATION PURPOSES. the set up of the JV lays the foundation for accelerated future growth in China. WE ARE NOT COMMENTING ON THE INVESTMENT MERIT OF ANY SECURITIES OF THE SUBJECT COMPANY.6 the globe.56 ƒ Complete service line in water treatment.0 17.com Price/book (x) 5. CFA +8621 6096 9025 EV/EBITDA (x) 28. contributing Relative to country (%) (1.14 0. 5 4 1 Complete service line in water KEY STOCK DATA & CONSENSUS EARNINGS treatment YE Dec (SGD m) 2008 2009 2010E Since its foundation as a small.9) (10.2 Joint venture with Mitsui & Co to offer capital gain Free float (%) 68. water recycling. Market Recs.77/2.9 21.9m in cash.9) (0. which it could recycle back into the business. THIS INFORMATION IS PROVIDED SOLELY . the same as in the corresponding period last Next results November 2010 year.5 4. the company has removed guidance on the expected timeline.50 20 purification of manufacturing process streams and energy reclamation 10 (such as oil recovery and recycling).00 (20) In 1H10.4 19. Projects in Libya misses schedule With continued delays on the potential SGD1.0 26. Hyflux Ltd HYF SP NON-RATED SINGAPORE / WATER UTILITIES CLOSE SGD3.3) 4.5 4. Initially. but said that it is still in talks with the counterparty.0 22. 3.13 WHERE IS THE STREET? Growth with clear focus Consensus Target Price (SGD) 3. Hyflux’s membranes and Recurring P/E (x) 27.7m.17 ƒ Municipal projects and MENA ensures growth.5 On 2 August. water- Revenue 554 525 598 treatment company in 1989. Algeria.372 respectively.000 plants in over 400 locations across Daisy Zhang.3 sectors.

what is the expected capital expenditure on new desalination projects for the next few years? Answers: We do expect the total capital expenditure on desalination projects to rise with the increasing number of new projects. With the economic outlook improving. it will rekindle projects in China that have been put on hold. in turn affecting off‐take for water. development and commercialisation of specialty materials. THIS INFORMATION IS PROVIDED SOLELY . we have several initiatives including: development of membrane applications in resource recovery. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES. The largest share will be spent on SWRO. DAISY ZHANG. concentration and purification treatments for manufacturing process streams. Through 2010 to 2015.panlv. we expect our capital expenditure on desalination projects to be in the range of SGD8b to SGD20b range. including applications such as used oil recovery and recycling. EPC orderbook for China stands at about SGD125m and the group is developing some 40 BOT plants. CFA HYFLUX LTD 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Capex of new projects: With the government of China and India putting more emphasize on the water treatment sector.net FOR INFORMATION PURPOSES. MSF and other membranes. 27 2 BNP PARIBAS .http://bg. The capital expenditure will increase from SGD8b in 2010 to steadily reach SGD20b in 2015. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. Q3: Plan for the renewable resources sector: The water-treatment business has been a powerhouse for the company since its foundation. followed by MED. and separation. such as L- lactic acid from natural renewable resources. We are hopeful that China will be a stronger earnings contributor going forward. Q2: Future geographic expansion: A large portion of current revenue is generated from the MENA region. Both the MENA region and China will remain as key markets for the group in the municipal sector where Hyflux has established a strong track record in desalination and in wastewater treatment and recycling. Management said the global recession in 2008 has hurt business volumes at industrial estates in China. is there any other region the company would particularly prioritize? Answers: The municipal sector will continue to be the main driver of the group’s revenue. what is the technology the company is offering to the market? What can be leveraged from the current successful water treatment business? Answers: Regard to the renewable resources business. waste recycling and energy reclamation. With the extension of the renewable resources business. Looking forward.

NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. The operating performance Mkt cap (USD m) 242 was much better in 2Q10 than in 1Q10. Transfer) projects and is a manufacturer of mass-burn units in EPS growth (%) 17.1 1.73 0.9m to EUR3.0) the extremely cold weather conditions in the first quarter of 2010 and Next results November 2010 over the Chinese Spring Festival vacation. In 2Q10. WE ARE NOT COMMENTING ON THE INVESTMENT MERIT OF ANY SECURITIES OF THE SUBJECT COMPANY. revenues fell from EUR10. because the small. Market Recs. 12 0 representing a decrease of 65. These visits also received extensive media coverage. 2Q performance picks up 10 In the first quarter of 2010.8 4.4 1. EPS 2011 (EUR) N/A ƒ Shifting toward large-scale.panlv.to medium-size incinerators market is yet to recover in China. as well as Chinese and foreign partners and potential clients.83 project contracts. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES.4 N/A achieve German technology standards ROE (%) 19. Meanwhile. ZhongDe's first.7 (74. Sources: ZhongDe Waste Tech . 28 28 October 2010 .44 N/A (Build. Since 1996.com Price/book (x) 1. It was also better than the performance in 2Q09. ZhongDe Waste Tech ZEF GR NON-RATED HONG KONG / WATER UTILITIES CLOSE EUR13.6) N/A China. Positive Neutral Negative ƒ Datong EPC project. of which more than 120 projects have been completed in the last 40 three years. The company’s name: “Zhong” – Recurring P/E (x) 7. The energy-from-waste plant has been visited by many high-ranking officials from China's central government and the Shanxi Province authorities. is operating smoothly and has passed the off-gas test taken by government authorities in China. Bloomberg Consensus the ZhongDe Group has completed (EUR) ZhongDe Waste Tech (%) approximately 200 waste.4 company had to interrupt construction work on large-scale projects during Relative to country (%) (2.net FOR INFORMATION PURPOSES. energy-from-waste plant was regarded as a model green plant by the high-ranking officers for the green economy of China.3) (1. This increase Free float (%) 38 was driven by BOT and EPC projects.1 profit. N/A N/A N/A Business based on waste KEY STOCK DATA & CONSENSUS EARNINGS processing YE Dec (EUR m) 2008 2009 2010E The ZhongDe Group is now active in the Revenue 46 40 N/A field of waste-to-energy EPC (Engineering. CFA +8621 6096 9025 EV/EBITDA (x) 2. waste-to-energy projects. Share price performance 1 Month 3 Month 12 Month construction-in-progress projects are located in North China.7m.disposal projects in about 13 provinces in 18 Rel to MSCI Hong Kong 50 China.85/10.7 N/A reflects the company’s ambition to daisy. which has created an excellent reputation for ZhongDe Waste Technology AG. the Absolute (%) 2. both in China and in other countries. THIS INFORMATION IS PROVIDED SOLELY . Datong project regarded as a model green plant in Source : Bloomberg China The Datong project.http://bg.zhang@asia.7 N/A from the Chinese words for China and Dividend yield (%) 1. waste-to-energy Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 facilities. waste-to-energy.7 6. ZhongDe successfully realized a net 3m avg daily turnover (USD m) 0. The EU-standard.9% vs the same period in 2009.5) (3. net profit 22 6 N/A Procurement and Construction) and BOT Recurring EPS (EUR) 1. EPS 2012 (EUR) N/A ƒ 2Q performance starts to pick up. the company is also Major shareholder CHEN Zefeng (51%) focusing on the marketing and negotiation of potential waste-to-energy 12m high/low (EUR) 17. Revenues increased 15% in 2Q10 to EUR11. 16 30 14 20 Strategic shifts.0 2. Because the large-scale.bnpparibas. Operate.1 N/A “De” – the abbreviation for Germany. Daisy Zhang.5 N/A and Chinese pricing strategies in the delivery of global services.3 15. The main (10) 10 (20) reason is that the company focused on large-scale.3m. Rec.50 WHERE IS THE STREET? Turning waste to treasure Consensus Target Price (EUR) N/A ƒ Business based on waste processing.8 30. large-scale EPC project.

Zhoukou BOT Project – Interior coating and construction of the foundations for indoor equipment have been carried out.8m. for example pre-sorting waste to improve the quality of waste mixes as this accelerates waste incineration.5m to EUR138. THIS INFORMATION IS PROVIDED SOLELY .http://bg. ƒ improving waste feeds. Ltd in 2Q10.8m using average exchange rate for 1H of RMB9. and the total contract value was RMB270m (EUR29. This also involves construction work customising incinerators to the individual needs of customers. we hope that the completion of other projects will sustain the positive momentum. The ZhongDe Group also considers it of prime importance to continuously gauge and improve the effect of incinerators on the environment. A small research team is currently working on the long-term development of new methods for enriching and purifying gas for generating power. What is the current construction status of ZhongDe’s other EPC and BOT projects? Answers: Zhucheng EPC Project – The main structure of the complex building has been completed.0678) including tax. Dingzhou EPC Project – The civil engineering work for the complex building has been carried out. Q2: Order Development: What’s the development of the order intake and backlog status of ZhongDe and what is the expected impact when the company shifts focus toward larger-scale projects? Answers: Order intake increased significantly from EUR1. What's the resource ZhongDe allocated to R&D and what are the current R&D initiatives? Answers: More than 10% of ZhongDe Group employees work in research and development. research is the life line of all the competitors. although the order backlog for 2009 was greatly amended from EUR39. Q3: R&D resource and initiatives: To maintain the competitive edge in the fast- growing industry environment. we are negotiating additional large-scale projects that have already entered the approval stage. ƒ improving the performance of gas processing. Research and development at the ZhongDe Group encompasses the following functions: Ongoing development of incineration techniques such as: ƒ improving pyrolytic incinerators for household waste with fluctuating heat values.and medium-sized projects. Feicheng BOT Project – The complex building for the Feicheng project has been finished and accepted.1m in 2Q09 to EUR25.5m in view of the retrospective application of IFRIC 12 to BOT projects. ƒ matching pyrolytic processes to the incineration of waste generated in the aviation industry (aviation waste). especially the preparation of international contracts. CFA ZHONGDE WASTE TECH 28 OCTOBER 2010 CONFERENCE TAKEAWAYS Q&A Summary Q1: Project status: With the Datong project receiving so much credit. Order backlog also increased strongly by 36% y-y to EUR187. NO NORMATIVE OR SUBJECTIVE COMMENTARY IS PROVIDED FOR COMPANIES REFERENCED IN THIS RESEARCH. The investigation work and negotiations for large-scale projects take more time than for small.net FOR INFORMATION PURPOSES. Currently. Beijing R&D Centre and Manufacture Project – The constructions for the separation wall and the peripheral structure of the technical building have been finished and accepted. BNP PARIBAS ASIA EQUITIES DOES NOT PROVIDE RESEARCH COVERAGE FOR COMPANIES REFERENCED IN THIS RESEARCH AND NO BNP PARIBAS RESEARCH RECOMMENDATION OR 渐飞研究报告 RATING IS ATTACHED TO THE COMPANIES.5m in 2Q10. Kunming BOT Project – The main structure for the complex building has been completed. DAISY ZHANG. 29 2 BNP PARIBAS .panlv. The main reason for the increase was the company signing a new EPC contract with Shouguang Fuyuan Waste to Power Co.

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Rating distribution (as at 27 October 2010) Out of 502 rated stocks in the BNP Paribas coverage universe. and (iii) BNPP is not aware of any other actual or material conflicts of interest concerning any of the subject securities and companies referenced herein as of the time of publication of the research report. In addition. a subsidiary of BNP Paribas. This report is prepared for professional investors and is being distributed in Hong Kong by BNP Paribas Securities (Asia) Limited to persons whose business involves the acquisition. No member company of the Group accepts any liability whatsoever for any direct or consequential loss arising from any use of the materials contained in this report. Shanghai Representative Office. whether as principal or agent. BNP Paribas Securities Corp. Where this report has been distributed by BNP PARIBAS SECURITIES ASIA it is intended for distribution in the United States only to “major institutional investors’ (as such term is defined in Rule 15a-6 under the Securities Exchange Act of 1934.com. (ii) no part of the compensation of the analyst(s) was.bnpparibas.zhang@asia. If the downside is 10% or more. 787 Seventh Avenue.K. © 2010 BNP Paribas Group 31 4 BNP PARIBAS .current price) / current price. directly or indirectly. our recommendation is an assessment of the mismatch between current market price and our assessment of current fair value. Ltd. and 8. New York. if the analyst doesn't think the market will reassess the stock over the specified time horizon due to a lack of events or catalysts. Reproduction. BNP Paribas represents that: BNPP or its affiliates beneficially own 1% or more the market capitalization of Huaneng Power. or will be. relate to the specific recommendation or views expressed herein. institutional investors receiving this report should effect transactions in securities discussed in the report through BNP Paribas Securities Corp.38% of the HOLD-rated companies are or have been clients in the past 12 months. is. This report may be distributed in the United States by BNP PARIBAS SECURITIES ASIA or by BNP Paribas Securities Corp. BNPP or its affiliates makes a market in the securities of China Longyuan.S. then the target price may differ from fair value.bnpparibas. 渐飞研究报告 . the recipient agrees to be bound by the terms and limitations set out herein. directly or indirectly. 130 are rated HOLD and 60 are rated REDUCE. the recommendation is BUY. All U. BNP Paribas Equities (Asia) Ltd. a branch of BNP Paribas. 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Recommendation structure All share prices are as at market close on 27 October 2010 unless otherwise stated.13% of the BUY-rated companies either currently are or have been BNP Paribas clients in the past 12 months. we have key buy and key sell lists in each market. This report does not constitute a prospectus or other offering document or an offer or solicitation to buy or sell any securities or other investments. The information contained in this report has been obtained from public sources believed to be reliable and the opinions contained herein are expressions of belief based on such information.. a U. Alvin. complete or verified and it should not be relied upon as such. or will be. By accepting this report. 312 have BUY ratings. 5. which are our most commercial and/or actionable BUY and REDUCE calls and are limited to at most five key buys and five key sells in each market at any point in time. 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