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Power
Fuelling the region’s growth
Asian energy companies are still in the black
For some companies in the power sector the reaction to the global credit crunch has been a predicable decline in earnings and revised short-term forecasts, but economic woes elsewhere are unlikely to quench the demand for fuel in Asia-Pacific. China is the world’s largest consumer of energy and India is power-hungry too, as are a host of developing nations such as Vietnam and Indonesia, which have yet to satisfy their demands for power.
Despite the fact that this year Korea faced its worst financial crisis in a decade, the Korean power monopoly Korea Electric Power Corporation (Kepco) topped the FA100 power sector list and boasted a W1.16 trillion ($91 billion) profit last year.
Kepco generates more than 90% of the electricity produced in Korea and, despite the unfavourable economic environment caused by high oil prices, it was awarded an A1 credit rating from Moody’s in 2007 – one grade higher than the rating given to the sovereign.
Revenues from oil and coal power plants in the Philippines, Australia, the Middle East and, most recently, Africa, helped boost revenues to W200 billion, up 16% from the previous year. The company is also looking to complete projects in the Chinese districts of Wuzhi, Shanxi and Gansu, build a wind power generation plant in Inner Mongolia and a power generation project in Azerbaijan.
Second on the power list is a company from India, a country that is one of the main drivers of Asia’s demand for power. Rising middle-class incomes, the growth of the manufacturing sector, increasing urbanisation and the country’s large population are stimulating the demand for power. India’s National Thermal Power Corp (NTPC) is trying to meet that need and, with a 30% market share, it is the country’s largest power company. Its capacity of 29,894 MW includes 18 coal-based and eight gas-based power stations, and it hopes that its business interests in hydropower, coal mining, power equipment manufacturing and power trading, will help realise the government’s commitment of providing power for all Indians by 2012. In the financial year 2007 to 2008 the company hit some firsts. Revenue crossed the Rs400 billion ($8 billion) mark, shareowners totalled one million and power generation exceeded Rs200 billion. NTPC aims to become a 50 GW company by 2012 and 75 GW by 2017. In addition, it is also committed to developing nuclear facilities, which some see as a cleaner energy source than coal.
Hong Kong contributed three constituents in the FA100 power sector, top was CLP Holdings that has been supplying power to its home market for more than a century and today serves 80% of the population. That’s a hefty market share maintained despite the fact that this year the government ended an agreement that had enabled CLP and HK Electric controls on rate of return and price.
CLP, of course, isn’t just focused on Hong Kong. It has close to 20 projects located across nine provinces in China, wisely capitalising on its relationship with the biggest consumer of energy. In addition, CLP has equity in approximately 6,400 MW of generating assets in Australia, India, Thailand and Taiwan.
Mention of the power industry can’t be made without reference to climate change and sustainability, especially in a city like Hong Kong where pollution is high on the political agenda. As part of the company’s Climate Vision 2050, CLP has pledged to reduce its CO2 output by almost 75% to 0.2kg CO2/kWh by 2050, while a 5% renewable energy target was met in December 2007, three years ahead of schedule. There are also plans to expand wind power overseas with a fourth wind farm in India in July 2010. The $160 million wind farm will increase CLP’s renewable energy portfolio to more than 1,000 MW. Other renewable energy projects, focusing on wind, small hydro and biomass, are planned for China and Australia.
Two more power companies joined the FA100 list this year. Hong Kong contributed Hong Kong & China Gas and Pakistan gained representation for the first time through Oil & Gas Development.
Hong Kong & China Gas had a bumper year, thanks in part to an extraordinary profit from the sale of properties, a revaluation surplus from investment properties and a one-off gain from the acquisition of Panva Gas.
In Pakistan, Oil & Gas Development is the country’s leading exploration and production company. Created in 1961, it is listed on all three Pakistani stock exchanges and was listed on the London Stock Exchange two years ago.
In June 2008, the company had 44 exploration licences covering 33% of the county’s total exploration acreage. Oil & Gas Development holds 46% and 34% of the country’s oil and gas reserves respectively and 61% and 25% shares in Pakistan’s oil and gas production. Retrenchment elsewhere seems not to be a factor for the company whose net sales increased by 48.2%.
| Ranking by revenue |
| Country |
Company |
(million $) |
| SK |
Kepco |
31,362 |
| IN |
National Thermal Power Corp |
7,236 |
| CH |
Huaneng Power International |
6,526 |
| HK |
CLP |
6,510 |
| HK |
Hong Kong & China Gas |
1,823 |
| PK |
Oil & Gas Development |
1,660 |
| HK |
Hongkong Electric |
1,605 |
| |
|
|
| Ranking by revenue growth |
| Country |
Company |
|
| IN |
National Thermal Power Corp |
22.1% |
| CH |
Huaneng Power International |
12.4% |
| HK |
CLP |
11.1% |
| SK |
Kepco |
6.3% |
| HK |
Hong Kong & China Gas |
5.6% |
| PK |
Oil & Gas Development |
4.1% |
| HK |
Hongkong Electric |
2.8% |
| |
|
|
| Ranking by net profit |
| Country |
Company |
|
| HK |
Hong Kong & China Gas |
19.6% |
| IN |
National Thermal Power Corp |
18.8% |
| HK |
Hongkong Electric |
9.1% |
| HK |
CLP |
7.2% |
| PK |
Oil & Gas Development |
-1.5% |
| CH |
Huaneng Power International |
-8.7% |
| SK |
Kepco |
-35.8% |
| |
|
|
| Ranking by ROE |
| Country |
Company |
|
| PK |
Oil & Gas Development |
44.9% |
| HK |
Hong Kong & China Gas |
37.5% |
| HK |
CLP |
17.7% |
| HK |
Hongkong Electric |
16.2% |
| IN |
National Thermal Power Corp |
14.7% |
| CH |
Huaneng Power International |
13.6% |
| SK |
Kepco |
3.3% |
| |
|
|
| Share price |
| Country |
Company |
Share price, Nov 1, 2007 |
Share price, Nov 1, 2008 |
Currency |
| PK |
Oil & Gas Development |
123.7 |
94.4 |
PKR |
| IN |
National Thermal Power Corp |
232.1 |
140.6 |
INR |
| SK |
Kepco |
39,250.0 |
25,900.0 |
KRW |
| CH |
Huaneng Power International |
9.2 |
3.8 |
HKD |
| HK |
Hongkong Electric |
39.5 |
41.3 |
HKD |
| HK |
Hong Kong & China Gas |
18.7 |
13.4 |
HKD |
| HK |
CLP |
52.6 |
52.0 |
HKD |
