THE biggest surprise winner to emerge from the Sichuan earthquake may be Dongfang Electric Corp.
China's second-biggest power plant builder fell 27 percent to a 16-month low after the 8.0-magnitude quake in Sichuan Province on May 12 flattened a Dongfang factory.
Since the disaster, the company has received 10 billion yuan (US$1.45 billion) of new contracts for wind turbines and other generation equipment, investor-relations manager Liu Zhi said.
The orders, which are running at twice last year's monthly pace, may help revive the company's shares, reported Bloomberg News. Dongfang has underperformed the Chinese mainland's CSI 300 Index by 16 percentage points since the quake. It has lagged behind the Hang Seng China Enterprises Index in Hong Kong, where the company also is listed, by 11 points.
With the Chinese central government planning an increase in alternative-energy use, Dongfang's wind turbine earnings will increase eightfold by 2009, said Michael Zhang, an analyst with BNP Paribas in Hong Kong who rates the stock "buy."
The unit accounted for about 2 percent of revenue in 2007, its first year of operation, and posted a profit of 45.5 million yuan, according to the company's annual report. That's about 1 percent of total profit from Dongfang's equipment-manufacturing businesses.
"Dongfang's wind power business will only start contributing significantly to earnings this year, so it's not fully reflected in the stock valuation," said Zhang, who covers Chinese machinery makers. "Most of the analysts on the street haven't realized how big the wind power business is for Dongfang."
Chinese wind equipment purchases total 30 billion yuan annually, making the country the world's fastest-growing market after the United States, said Dave Dai, an analyst at CLSA Asia-Pacific Markets.