Datang Power Surges on Asset Restructuring Plan: Hong Kong Mover

Datang International Power Generation Co., the listed unit of one of China’s five biggest power generators, surged the most in more than two years in Hong Kong trading on plans to restructure its coal-to-chemical business.

The stock rose 16 percent to HK$3.51 at 10:32 a.m. local time, the most since November 2011. Earlier it rallied as much as 21 percent.

Datang Power said yesterday it had signed a restructuring accord with state-owned asset management company China Reform Holdings Corp. for the unit. China Reform will acquire the assets or equity in the unit as part of the plan, Datang said in a statement. A partial disposal of the business might boost Datang’s 2015 earnings by 9 percent, Credit Suisse Group AG analysts led by Dave Dai wrote in a research note today.

“The restructuring is hugely positive to Datang Power as the coal-to-chemical segment has been a large drag on earnings and valuation since these investments were announced in 2008,” the analysts led by Dai said.

Credit Suisse raised its recommendation on the stock to outperform and increased the target price by 19 percent to HK$4.20.