Company info: it is the largest power plant company in China. It develops, constructs, owns and operates large coal-fired power plants throughout China. They own and operate power plants located in Liaoning, Fujian, Hebei, Jiangsu and Guangdong. In 2006, its total power generation are 159.9B kWh ( 124.5B kWh as of 3Q07, 11% increase over the same period last year).

Financial data: based on 2006 result, P/E ratio 20, return on equity 14.0%, LT debt equity ratio 81%, dividend yield 2.96%, in comparison to other China base stock, HNP's result is pretty solid ga la.

Sector info: In 3Q07, China's GDP rise 11%, power is in need for any country in high growth, because you need power for every development porjects, therefore, the power plant company's (PPC's) growth is normally in line with GDP growth. 05-06 are the tough years for PPC's cuz coal price & demand increase until the government lauch the Coal-Electric co-movement in 2006.

Outlook: 07 Coal-Electric co-movement should happen in early 08, it should increase HNP's revenue . Also, coal price increased 9% in 07 because China closed down 1/3 of the unsafety/under investigation coal mine since 2006, as those coal mine re-open, the price should rise slower than the current stage, so that HNP's profit should improve next year.

Risk: 1) coal price continue to rise will give addl cost to HNP; 2) supply more than demand as PPC's keep building new plants; 3) no more tax exemption after 2 years; 4) interest rate rise will increase HNP's cost of capital.

Conclusion: I will increase my target price from $9.3 to $10.00 and current price is $9.95.

Any conflict? Yes, i have HNP in my portfolio since 2005.