163.com: SEP to Rebuild Itself Overseas

SEP, aimed at rebuilding itself overseas by 2020, is currently making overall arrangement in the Six Economic Corridors, expanding the market in major countries along the Belt and Road, and has completed a series of benchmark projects including the gas-fired power project in Malta and PV power projects in Japan. In October 2016, the company planned to purchase 66.4 percent stake of the Pakistan-based K-Electric Limited (KE) for USD 1.77 billion, and also won the approval from NDRC and Ministry of Commerce in China. As Pakistan's only vertically-integrated power company engaged in generation, transmission and distribution, KE has a total installed capacity of 2,243 MW, accounting for 10 percent of that of the country. The company reported a net profit of USD 183 million for the first half of 2016, with expected annual net profit of USD 360 million in 2016. Calculated by the USD-RMB exchange rate of 7, the company's annual net profit is about RMB 2.52 billion in 2016, which means the 66.4 percent stake equals RMB 1.67 billion. Excluding the financial expense arising from the purchase consideration, the net income is RMB 1.05 billion, which equals 115 percent of the net profit attributed to SEP, realizing the company's goal of "building another SEP" really.

 

According to the research report of BOC International China Limited, SEP will also benefit from SOE reform and integration of SPIC's high quality assets. The company will acquire 100 percent stake of SPIC Jiangsu Company from SPIC for RMB 3.01 billion, with the corresponding PE ratio of 20.76, and will also raise fund of RMB 2.09 billion to pay for the purchase price and the construction of equity investment project. With the aggregated wind power and solar power installed capacity of 560 MW at present and no idle capacity, SPIC Jiangsu Company has a net profit margin as high as 24.1 percent, much better than that of SEP. Jiangsu Company is expected to realize a net profit of RMB 145 million in 2016, which equals 15.8 percent of the net profit attributed to SEP.

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