CRP shares rise after it books HK$2b of impairments on coal mining assets

Shares of China Resources Power Holdings, whose board has been accused by minority shareholders of breaching its fiduciary duties by causing the company to enter into problematic mining deals, rose 2.48 per cent to end at HK$22.75 yesterday after it booked HK$2 billion of impairments on its coal mining assets and said a further write-down was unlikely.

The shares traded as high as HK$22.80 and within sight of the 52-week peak at HK$23. It was the loftiest close for the stock since settling at HK$22.80 on August 11.

The power generation unit of state-owned conglomerate China Resources (Holdings) on Monday posted a 13.8 per cent rise in net profit to HK$6.06 billion for the first six months.

An analyst who attended a briefing by the management said the impairments were booked purely to reflect the major fall in coal prices, and were not a result of any rectification of alleged overpayments for the coal mining assets.

According to a Standard Chartered research report, HK$1.9 billion of asset impairment charges was booked for indirectly held subsidiary Shanxi China Resources Liansheng Energy Investment (CR Liansheng) and HK$544 million for China Resources Taiyuan (CR Taiyuan).

CR Liansheng owns 49 per cent of CR Taiyuan, a joint venture formed in mid-2010 for the acquisition of three coal mines and related assets in Shanxi province from businessman Zhang Xinming's Shanxi Jinye Coking Coal for 7.9 billion yuan (HK$9.9 billion).

Minority shareholders last year launched a lawsuit against former and current CRP directors, alleging they had caused the company losses since the assets were bought at inflated prices and the mines lacked proper exploration and mining rights.