Big investment in thermal power projects

Transaction Performance: Huayin Electric announced that it signed an agreement with the government of Yangjiang City, Guangdong Province on July 31 to invest in a 6×1000MW coal-fired power generation project in Yangjiang. Stimulated by this news, the stock jumped up on Thursday.

Comments: The company is located in central China and is an important strategic channel for the “West Power Transmission to the East” and “Northern Power Transmission to the South”. The company and the Yangjiang City People's Government signed the "Datang Huayin Yangjiang Coal-fired Power Project Investment Cooperation Agreement," and plans to invest 61,000MW of coal-fired power projects in Yangjiang. In this investment, the first phase plans to build a 2×1000MW super-critical coal-fired power generation and supporting coal terminal project. The preferred site of the project is near Shijiao Mountain, Xitou Town, Yangxi County, Yangjiang City. Alternative sites are located near Xiushan and Heishipo. Strive to apply for roads that have been submitted to the National Development and Reform Commission by the Guangdong Provincial Development and Reform Commission and applied for the preparatory work for the project in the near future. It will be approved and commenced before the first half of 2014. The company did not disclose the amount of investment, which can be roughly estimated based on the amount of investment in the same type of power plant at least 21 billion yuan.

The latest semi-annual report of the listed company and the second quarterly report of the fund show that as the net profit of thermal power shares has increased significantly, the intensity of the fund's increase in thermal power stocks in the second quarter will increase. However, Huayin Electric's asset-liability ratio is relatively high. At the end of the first quarter of this year, total assets totaled 16 billion yuan while liabilities reached 14.5 billion yuan. Last year, the financial cost was 566 million yuan. In the first quarter of this year, the financial cost reached 150 million yuan.

Judging from the performance of the secondary market of the stock market, due to news stimulus, Thursday's short-term heavy volume limit, currently at the 5th, 10-day moving average, but the intraday daily limit has been opened for several times, the cap will not stop reluctantly , and whether the 10-day moving average can effectively breakthrough remains to be seen, investors should not blindly see more.

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