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HPI - Powering the Future October 1994

HPI - Powering the Future October 1994. Agenda. Political and economic climate Power industry Corporate profile Operations Prospect. Agenda. Political and economic climate Power industry Corporate profile Operations Prospect. Political Background.

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HPI - Powering the Future October 1994

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  1. HPI - Powering the Future October 1994

  2. Agenda • Political and economic climate • Power industry • Corporate profile • Operations • Prospect

  3. Agenda • Political and economic climate • Power industry • Corporate profile • Operations • Prospect

  4. Political Background • Decision to undertake a fundamental economic reform in 1978 • Smooth leadership transfer in 1989 • Reinforcement of reform’s importance and necessity in 1992

  5. Economic Growth • GNP increased gradually in the past five years and will grow at estimated rate of 7% to 9%

  6. Economic Climate • Fully controlled currency exchange rate • Soft correction policy to control inflation • Preferential tax policy for foreign investors • Pegged RMB to US dollar at 1:8.7 since January 1, 1994

  7. Agenda • Political and economic climate • Power industry • Corporate profile • Operations • Prospect

  8. Power Industry Rivalry among Existing Power Companies Industry Overview High Entry Barriers PotentialEntrants Suppliers Buyers Sufficient Supply Huge Demand Substitutes Few Substitutes

  9. Shanxi 2000 Required Capacity (MW) 1992 Installed Capacity (MW) Power Requirements 0 10,000 20,000 30,000

  10. Retail Electricity Generation Distribution (Low Voltage) Raw Material Purchase Transmis-sion (High Voltage) End Users Industry Value Chain

  11. Agenda • Political and economic climate • Power industry • Corporate profile • Operations • Prospect

  12. Company Profile • Founded in June, 1994, with a mandate to develop and operate large power plants in China • A spin-off of high quality assets from HPIDC • Total Assets: 1.36 billion • Net Income: 96.2 million • ROE: 15.8% • Installed Capability: 2,900 MW • All plant construction projects were completed on time and within budget

  13. Proposed Ownership Ministry of Electrical Power Foreign Director Investors China Huaneng Group Local Government Investment Corp. 35% HPIDC 40% Holders of Shares of Global Equity Offering 25% Huaneng Power International Inc. (HPI)

  14. Sustainable Competitiveness • Strong support from central and local government • Advantage of economy of scale • Strategic development through acquisition and expansion • Operational efficiency

  15. Agenda • Political and economic climate • Power industry • Corporate profile • Operations • Prospect

  16. Operational Efficiency

  17. Management • Experienced management team in power generation and plant management • Good relationship with HPIDC, central and local government.

  18. Agenda • Political and economic climate • Power industry • Corporate profile • Operations • Prospect

  19. Guaranteed rate of return • To reduce the risk of investing in China • To allow HPI to adjust its rates to recover higher input costs • Incoming legislation on guaranteed return rate

  20. Projected Profit Growth

  21. Plant Development

  22. Q & A Thank you !

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