Sinohydro expects growth in orders, overseas revenue

Sinohydro expects growth in orders, overseas revenue
Dam builder plans to increase new orders by 21 per cent, and to boost
foreign income by 16 per cent
Toh Han Shih
South China Morning Post, May 23, 2012

Sinohydro, the world's biggest dam builder, plans to increase domestic
orders and overseas revenue to double digits this year, as the central
government plans to expand the mainland's hydropower sector as part of
its clean energy drive.

Last October, the state-owned firm raised 13.5 billion yuan (HK$16.55
billion) from its listing in Shanghai, the biggest mainland IPO last
year. Sinohydro has built 65 per cent of China's large and medium-sized
dams, including its largest to date, the Three Gorges Dam, and accounts
for at least half of those built in more than 50 nations, according to
its website. The company has secondary businesses in roads, railways,
building construction and wind energy.

Sinohydro plans to increase its new orders by 21.2 per cent to 155
billion yuan this year, of which domestics orders are targeted to soar
44 per cent to 98.1 billion yuan, while international orders are
expected to drop 4.8 per cent to 56.9 billion yuan, according to a
document on its 2011 annual general meeting.

However, the company aims to boost overseas revenue by 16.1 per cent to
33.5 billion yuan this year, while it expects domestic revenue to grow
at a slower pace of 7.9 per cent to 89.6 billion yuan and total revenue
to rise 8.5 per cent to 123.1 billion yuan.

Sinohydro hopes to have a gross profit of at least 5 billion yuan this
year, compared to last year's gross profit of 4.99 billion yuan. The
company plans to invest 26.88 billion yuan in 110 ongoing projects and
12 new projects this year.

"The company believes the global construction market will maintain
stable growth, while in 2012 China will push water infrastructure in a
big way. China's efforts to save energy and reduce emissions will
accelerate demand for hydropower and new energy, while the company will
further raise the level of its 'going out' internationalisation push,"
the company said.

"As such, the company will maintain excellent growth in domestic
hydropower construction and international infrastructure projects."

The mainland has a total installed capacity of 25,000 megawatts of
hydropower in use or under construction, according to Sinohydro's website.

The 12th five-year plan from 2011 to 2015 calls for the addition of
40,000 MW of hydropower.

At present, hydropower accounts for only 3 per cent of the installed
capacity of mainland power generation, with most of it from more
polluting coal-fired plants, according to Sinohydro's website.

In April, the nation's electricity generation grew 2.7 per cent to 386.9
million MWh, of which coal-fired electricity inched up 0.1 per cent to
319.6 million MWh, hydropower surged 13 per cent to 47.7 million MWh,
and nuclear energy rose 12 per cent to 7.5 billion MWh, according to
official data.

However, Sinohydro's overseas ambitions may cause environmental controversy.

A recent report by International Rivers, a green NGO, has criticised
large-scale dam projects around the world.

"Large dams have a history of cost overruns and questionable economics.
They typically have been built without public participation, and have
increased societies' vulnerability to corruption and climate change.
Centralised projects often had a massive social impact on local
communities, but their benefits have largely bypassed the rural poor,"
the International Rivers report said.

"International Rivers is not in principle opposed to dam building. But
the strong focus on large hydropower projects is misguided, and better
options are usually available," the report said.

hanshih.toh@scmp.com
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