China Resources Power Stocks Plunge After $927 Million Placement; China Longyuan Power Ascends with Wind-Farm Asset Acquisition

Shares in China Resources Power plummet by 5.8% following the company's raising of $927 million through placement. Concurrently, competitor China Longyuan Power sees an uptick after an agreement to purchase wind-farm assets from its major shareholder.

Stock values for China Resources Power (CRP), a top earning electricity producer in the country, took a nosedive after it generated HK$7.2 billion (US$926.6 million) through discounted share sales. Meanwhile, competitor China Longyuan Power Group saw an uptick following the announcement of its plan to purchase wind farm assets worth 1.69 billion yuan (US$237 million) from its majority stakeholder.

The government-regulated CRP offloaded 198.5 million fresh stocks to the public at a rate of HK$19.70 per share, which is a 5% decrease from Monday's closing price of HK$20.75, generating HK$3.9 billion in the process.

The parent company also acquired an extra 168 million shares in a different placement valued at HK$3.3 billion.

Shares of CRP experienced a drop of 6.6% to HK$19.38 on Wednesday, even as the Hang Seng Index saw a rise of 1.3%. Since Beijing unveiled a series of strategies last month aimed at improving the sluggish economic growth and reviving the real estate and stock markets, the shares have seen an increase of up to 16.7%.

Taking into account the current market circumstances and the stock price, the board members deem the stock sale as "suitable to refill the company's cash reserves," the firm announced in a press release on Wednesday. The funds generated will be utilized for routine and overall business needs, such as settling bank loans and other outstanding payments, it further explained.

Dennis Ip, who is in charge of power, utilities, renewables, and energy storage at Daiwa Capital Markets, anticipates a temporary adjustment in the share price due to its high value. This was mentioned in a note.

As of June's end, CRP possessed HK$9.96 billion in cash, and its net debt, subtracting cash, was 156% of its shareholder equity, a rise from 153% at the previous year's end. The company's loans increased by HK$18.7 billion during the first six months of the year.