Brokerage blows away case for wind power play
Some people might say it's a case of sour grapes. Others might see it as valid independent research.
Credit Suisse, a name that has been conspicuous by its absence from most of this quarter's glut of initial public offerings, has made a habit of calling many of the new listings expensive.
Following its take on the pricey Sands China and Wynn Macau, the Swiss brokerage yesterday took a swipe at China Longyuan Power Group Corp in a report entitled: 'How much to pay for a hot concept?'
It went on to say China's biggest wind farm, which made its debut yesterday, was being traded at an implied price-earnings ratio of 60 times, based on its guaranteed profit this year. That made Longyuan twice as expensive as other wind-power producers around the world.
Credit Suisse said Longyuan would need to spend 57 billion yuan (HK$64.7 billion) to meet its expansion plans next year, compared with its net debt of eight billion yuan after listing and about 1.7 billion yuan cash-flow by the end of next year.
