HONG KONG Shares in Dongfang Electric Corp Ltd
(1072.HK), China's top power generator maker, dived as much as
20 percent on Friday to their lowest level in more than a year
after it said the earthquake in Sichuan had seriously damaged
production at its steam turbine business.
Dongfang (600875.SS) said in a statement late on Thursday
that the steam turbine business accounted for 20 percent of its
operating revenue in 2007 and there were casualties at the
steam turbine operation in Hanwang town in Mianzhu.
The quake had little impact on its other operations, while
production and operations at its headquarters had been fully
restored, it said.
Analysts say it may take more than a year for the steam
turbine business to fully recover and the potential earnings
impact could be up to a fifth.
"Given the steam turbines have higher profit margins than
other segments, we belive profit contribution from steam
turbine will be higher than 20 percent on a full-year basis,
about 30-40 percent, according to our estimates," JP Morgan
analyst Boris Kan said in a report.
"If steam turbine can not resume operations over the
remaining course of 2008, the potential earnings impact on
listed Dongfang Electric could be 15-20 percent."
Shares of Dongfang had dropped 16.5 percent to HK$25.05 by
0300 GMT, lagging a 1.2 percent gain in the index of Chinese
companies listed in Hong Kong .HSCE.
Already some 20,000 people are confirmed dead and 25,000
remain buried as a result of Monday's quake in southwest
Sichuan province, China's deadliest earthquake in decades.
HSBC analyst Steve Man said Dongfang may temporarily source
turbines from foreign suppliers and he believed the most likely
candidates included Japan's Mitsubishi Heavy (7011.T), Fuji
Electric (6504.T) and Korea's Doosan Heavy (034020.KS).
French engineering firm Alstom (ALSO.PA) may also benefit
as it was a technology partner of Dongfang, Man said.
(Reporting by Judy Hua; Editing by Anne Marie Roantree)