Three Gorges Probe

Yangtze Power Company profits down, operating costs up

(October 31, 2008) China Yangtze Power Co Ltd, operator of the Three Gorges hydroelectric dam, said third quarter net profit fell 14.69 percent year-on-year to 1.93 billion yuan due to a fall in investment income and rising costs. In a report filed with the Shanghai Stock Exchange, the company said operating revenue was little changed at 3.375 billion yuan, but operating costs were up 11.82 percent at 1.17 billion yuan.

Operating revenue in the first nine months fell slightly to 6.72 billion yuan from 6.77 billion a year earlier mainly due to lower electricity output. Operating costs rose 17.36 percent to 3.176 billion yuan.As the country’s largest hydropower producer, the company was much less seriously affected by soaring coal prices than other producers of electricity, such as Huaneng Power, Huadian Power and Datang Power.

The company produced 33.84 billion kwh of electricity in the nine months, down 0.66 percent year-on-year. About 12.906 billion kwh was generated by Gezhou Dam, up 8.37 percent year-on-year, and 20.935 billion kwh by the Three Gorges complex, down 5.52 percent.

Yangtze Power shares output at the Three Gorges plant with its state-owned parent, China Three Gorges Project Corp. The plant produced a total of 60.558 billion kwh of electricity in the first nine months, up 29.36 percent year-on-year, boosted by new generation facilities.

However, the company noted that all new output at Three Gorges belongs to its parent company.Investment income stood at 138.14 million yuan in the third quarter, down sharply from 531.08 million a year earlier, while investment income in the first nine months decreased by 75.36 percent year-on-year to 462.5 million yuan.

The company said investment income was hit by a sharp profit decline in Shanghai Electric Power Co Ltd (SHA 600021), in which the company has invested.In addition, China Yangtze Power company sold 400 million H-shares of China Construction Bank to a Hong Kong company for 1.6 billion yuan in April 2007, with a gain of 1.18 billion yuan from the sale. This transaction produced a high base effect for investment.

Earnings per share came in at 0.205 yuan in the third quarter, against 0.24 a year earlier, while EPS in the first nine months stood at 0.362 yuan, compared to 0.518 previously.The company did not give a forecast for the rest of the year.

In May, China Yangtze Power said its parent company China Three Gorges was in talks with authorities for a listing.

Shares of Yangtze Power have been suspended from trading since May 8.

Xinhua, October 31, 2008

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