International Finance

Spring 2003

Some Ideas on “Huaneng Poewer International Inc.”

You are a financial consultant who has been hired to advise Huaneng on how it should proceed.

• In your opinion, what type of listing does it make sense for Huaneng to pursue? (within China listing, HK, London, US; if US between (Rule 144a, Level 2, Level 3)). Justify your choice relative to others.

• What share price is reasonable to expect. Investment bankers are saying that as a check on a discounted cashflow analysis that some simple valuation multiple analysis should be performed. Based on 1995 expected earnings per share (in Exhibit 14) and the appropriate valuation multiple. Based on information in Figure 10 and 14, what is a reasonable range of prices? What if there is a possible change in projected earnings of 10% how might this affect the range of expected issue prices. What is your best estimate of what price Huaneng can expect to receive and why? ---Please bring some printouts of your calculations to class.

• Assuming Huaneng precedes as you advise above, given market conditions, should Huaneng Power issue equity or wait?