China Nuclear Generator CGN Power Surges on Hong Kong Debut

By Aibing Guo and Fox Hu

CGN Power Co. (1816) surged on its debut in Hong Kong today as investors flocked to the shares of China’s biggest atomic energy producer at a time when the nation is pushing to boost nuclear generation and cut pollution.
The shares rose 19 percent to close at HK$3.31 in Hong Kong. The city’s benchmark Hang Seng Index gained 0.2 percent. CGN sold 8.83 billion shares at HK$2.78 apiece, the top of its price range, in Hong Kong’s biggest initial public offering in two years.
CGN Power is attracting investors as the world’s second-biggest economy plans to cut coal usage and boost nuclear power to reduce pollution. China’s cabinet last month reiterated a plan to install as much as 58 gigawatts of nuclear, about equal to Turkey’s
total generation capacity, and begin constructing an additional 30 gigawatts by 2020.
“Nuclear power production has policy support from the state and, increasingly, the backing by local residents as they understand our business better and better,” Chairman Zhang Shanming said at the listing ceremony in Hong Kong.
The IPO valued CGN Power at 17.4 times this year’s estimated earnings, data compiled by Bloomberg show. Producers of alternative energy globally trade at a median 19.8 times earnings, according to the data.

Source: Imaginechina

A model of nuclear reactor is displayed at the stand of CGN (China General Nuclear... Read More

Eighteen anchor investors agreed to buy about $1.33 billion of stock before the sale, according to CGN Power’s prospectus. GIC Pte, Singapore’s sovereign wealth fund, and Och-Ziff Capital Management Group LLC (OZM) agreed to invest $100 million each.

Favored Industry

The company forecasts profit to climb to 5.47 billion yuan ($886 million) in the year ending Dec. 31, from 4.19 billion yuan, according to its prospectus.
Nuclear power is favored in China due to rising concerns over global warming, Hong Kong-based research analysts Joseph Lam, Thomas Tang and Suhan Hou of Nomura Holdings Inc. said in an e-mailed note today.
“High entry barriers, together with the government’s supportive stance, should provide a healthy environment to foster rapid capacity growth,” Nomura said.
CGN Power plans to double its nuclear plants in five years from 11 currently, its chairman said last month. It has nine under construction and will add another two by increasing its stake in the Taishan nuclear project, Zhang said.
China, the world’s largest greenhouse gas emitter, agreed last month to begin reducing carbon dioxide emissions and generate 20 percent of its power from non-fossil fuels by 2030. The pledge, made at a meeting with U.S. President Barack Obama, marked the first time the country set a target for capping emissions.
CGN Power joins BAIC Motor Corp. and Dalian Wanda Commercial Properties Co. (1068366D) in selling shares this month, bringing Hong Kong IPO proceeds for the year to the highest since 2010, according to data compiled by Bloomberg.