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Company’s Fact

Dalian Thermal Power Co. Ltd. is engaged mainly in the production and distribution of electric and heat power. This includes central heating, CHP (Combined Heating and Power), and engineering design, installment, and maintenance of heating supply system.

Dalian Thermal Power Co. Ltd. is located in Dalian, Liaoning Province, which is in the Ring Bohai economic circle, and it is the leading company in municipal infrastructure, the largest CHP, central heating corporation group in Northeast China. The productive scale, quantity, as well as the economical benefits of Dalian Thermal Power Co. Ltd. has been always the best among 6 individual local thermal power enterprises. The company has a quiet substantial 25% of the market share.

Dalian Thermal Power Co. Ltd. was approved by Dalian economic system reform committee and officially established on 1993, and known as Dalian Thermal Power Group Co. Ltd. Consequently, the company changes its name into Dalian Thermal Power Co. Ltd. after its shareholders’ conference on 18-Dec-1995.

Financial Overview

Related companies (Subsidiaries/Holdings company/Collaboration/same Holdings Company)

Dalian State-owned Capital Management Bureau,

Holdings Company

Percentage of holdings: 32.91%

Dalian People’s Government State-owned Capital Supervision committee, Holdings Company

Percentage of holdings 45.15%

Dalian Daxian - Net System co. Ltd.

Collaboration Company

Percentage of holdings: 20%

Dalian Haixing Therma; Power Engineering Co. Ltd.

Belongs to Same Holdings Company.

 Stock Health

As on 11, July, 2008

OPEN 9.35  HIGH 10.32  LOW 9.30 CLOSE 9.38 VOL 1262.63

The stock has increased 10.02%, and ranked itself among the top 10 gainers of that respective day.

Key Stats & Ratios

Unit: 10,000yuan (RMB)

Project                        1^st quarter, 2008                2007                                2006
Net Income                27539.99                      60181.29                            59382.53
Net Profit margin       3685.50                        1925.07                    1956.01
Ratio of Margin          13.38%                          3.20%                                   3.29% 

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Daily Stats (last one month):

Date                Open High   Low     Close     Vol.

11-JUL-08     9.35    10.32 9.30    10.32 126,263 

10-JUL-08    10.02   10.02 9.34    9.38    64,481   

9-JUL-08      10.05    10.17 9.75    9.95    65,226 

8-JUL-08      10.00    10.20  9.70   10.03 55,707 

7-JUL-08        9.59    10.20 9.53    10.13 84,294 

4-JUL-08        9.45    9.90    9.33    9.56    54,905 

3-JUL-08        8.77    9.90    8.60    9.65    74,644 

2-JUL-08        8.88    9.14    8.58    9.08    45,624 

1-JUL-08        9.47    9.58    8.88    8.90    53,688 

30-JUN-08    9.17     9.67    9.00    9.55    68,993 

27-JUN-08    9.70     9.81    9.04    9.09    78,948

26-JUN-08    9.55     10.20 9.40   10.04 114,802 

25-JUN-08    9.00     9.75    8.80    9.67    100,838

24-JUN-08    8.80     9.18    8.50    8.98    56,427 

23-JUN-08    8.53     9.26    8.40    8.92    90,454 

20-JUN-08    8.76     8.90    8.35    8.81    83,537 

19-JUN-08    8.11     8.90    7.95    8.14    49,981 

18-JUN-08    7.78     8.60    7.39    8.49    56,670 

17-JUN-08    8.99     9.10    8.21    8.21    63,666 

16-JUN-08    8.53     9.30    8.48    9.12    75,131 

13-JUN-08    8.49     8.88      8.26   8.53   47,801

Due to the earthquake in Wenchuan of Sichuan Province in March, the price of coal has sharply increased, as a direct result, in the first quarter of this year, about half of total 3112 Chinese power production enterprises are suffering losses. Shockingly yet understandably, top five power productive group Huaneng, Datang, Zhongdiantou, Huadian and Guodian has made a total loss of 2.7 billion Yuan (RMB). Therefore, we have reasons to believe that the present situation facing Chinese power industry is going to get worsen and more crucial in the coming second quarter of the year due to the continuously appreciation of the price of coal, which is the main input of this power industry. This earthquake has also made it even more difficult for the company to claim the bad debt which was one of the main tasks laid down by the president of the company at the starting of this financial year.

Dalian Thermal Power Co. Ltd. on 27^th June has applied to increase its credit facility of 50 million Yuan (RMB) in China Agriculture Bank, Dalian Branch, in order to reserve coal for securing the heating supply in the coming winter. The company reported that there is a delay in reserving coal this year and their coal reserve stands only half of what it was this time last year due to the shortage in supply and lack of funding.

This means, same as other companies in Chinese power industry, the daily operation of the Dalian Thermal Power Co. Ltd, has been negatively affected as well. The question is, why is the stock of the company grew more than 10 percent on Friday, 11-Jul, which had ranked the company among top 10 gainers, in such an overall depressing industry phenomenon?

Well the answer is ‘environment friendly platform’, which means Dalian Thermal Power Co. Ltd has been considered as environment friendly company rather than a Power engineering company. The company has introduced cutting age technology into China from advanced countries, and invested in ‘Geothermal Heat Pump’ projects, and ‘Low-vacuum heating’ projects. As a result, about 40,000 tons of coal has been saved every year, and more importantly, it has been approved that the above mentioned projects has reduced the waste pollution dramatically.

All these concepts of the company has also attracted the interests of foreign investors, and it is believed that the strategy of the company will be leading the Chinese power industry into a new era of environment friendly power industry as the reason of  the ‘green-house effect’ that is been taken very seriously by the world in recent years.

I would consider the stock of Dalian Thermal Power Co. Ltd as low risk stock, as it has potentially high return value for the investors in middle-term. In addition, it has good potential to grow in a short-term as well however; investors should pay close attention before buying as, I believe that a drop back will be followed with a new round of increase in the price of this stock in near future. It is a great chance for investors to enjoy a short-term good reward before the end of third quarter of the year.

However, there are uncertainties in this stock for long-term duration holding, as maintaining a stable supply of coal and sufficiency enough capital are main deciding factor in the growth of this company, like any other in similar industry. Worth mentioning is that in long-term, ‘eco-friendly companies’ are likely to gain more momentum, rather than the ones with uses conventional resources to operate.