China Longyuan Power Group Corp Ltd initially planned to raise around $700 million through the IPO, but the company has boosted its expectations because of stronger-than-expected demand.
China Longyuan Power Group’s offering price represents a multiple of about 22 times to 28.9 times forecast 2010 earnings and postshoe multiple of 23 times to 30 times.
By comparison, global wind peer Spain’s Iberdrola Renovables trades at 28 times 2010 forecast earnings while EDP Renovaveis trades at 30 times.
China Longyuan Power Group is the largest wind power generator in Asia and the fifth-largest in the world. It had a 24 percent share of China’s wind energy market in terms of total installed capacity as of the end of 2008, according a UBS report, citing wind power research company BTM Consult.
The company had 3,032 MW of consolidated wind power generating capacity at the end of the third quarter 2009.
The underwriters on average estimated Longyuan’s 2009 earnings would jump 164 percent to 890 million yuan ($130 million), and a further 100 percent jump to 1.78 billion yuan in 2010. The growth is mainly because of capacity expansion in the wind power segment and lower coal costs.
Renewable energy accounts for just a fraction of a percent of China’s total electricity output. Coal-dependent China hopes to bring that up to 10 percent by 2010 and 15 percent by 2020. Last year, global investments in renewable energy reached $119 billion, where a fifth was invested in Asia Pacific, according to a report by UNEP Sustainable Energy Finance Initiative.
China led new investment in Asia, rising 18 percent over 2007 to $15.6 billion, mostly in new wind projects. China’s renewable energy sector has grown remarkably in recent years, as Beijing pushes for sustainable development, but overcapacity is already threatening polysilicon and wind power equipment industries as a result of blind expansion.
Only two renewables firms, Spain’s Iberdrola Renovables and Portugal’s EDP Renovaveis (EDPR), have launched larger IPOs during the past decade. Iberdrola Renovables raised $6.6bn in 2007, while EDPR drummed up $2.4bn in 2008.
China Guodian Corporation mainly engages in the development, investment, construction, operation and management of power generation, and the sales of power (and heat). It is involved in the investment, construction, operation and management of the business relevant to its core business, such as coal, power generation equipment, new energy, transportation, high-tech, environment protection, technological services and consultancy. Besides that it is also involved in both domestic and international financing, and international trade, economic cooperation, international project contracting and international laboring service.
China Guodian Corporation owns 16 regional and provincial branch companies, 13 extra large subsidiary companies, 2 R&D institutes, nearly 200 power enterprises, covering 31 provinces (autonomous regions and municipalities) with 110,894 employees. There are also 4 Chinese A-share listed companies, the GD Power Development Co. Ltd, Guodian Changyuan Power Development Co., Ltd, Inner Mongolia Pingzhuang Energy Resources Co .Ltd, and Ningxia Younglight Chemicals Co.Ltd.
By the end of September 2009, the total controllable installed capacity of China Guodian reached 76,950 MW, including 68,457.5 MW by thermal and taking 88.96% of total installed capacity, 4,961.4 MW by hydro (including 3.9MW tidal power) and taking 6.45%, and 3,477.7 MW by wind power and taking 4.52%, and 54MW by biomass generation and taking 0.07%. There are 43 units with the single unit capacity equal or larger than 600 MW taking 39.75% of total thermal power. And the units with single unit capacity of 300MW and above take 82.05% of the total thermal power capacity.
China Guodian is the largest wind power operator in Asia and No. 5 in the world. The capacity of tidal power generation ranks 3rd in the world and 1st of Asia.
China Guodian owns coal mines with coal resources of 13.2 billion tons and annual coal production over than 22 million tons. China Guodian owns desulphuration technology and manufacturor, with reference unit over 45120 MW in operation, and 32510 MW under construction.