Valuation of Coal-fired Power Plants

Our valuation team at Valtech has recently taken on a challenging and rewarding project: valuing an investment in coal-fired power plants in China. This investment was considered a major transaction for our client, who had to comply with the listing rules of the Stock Exchange of Hong Kong (HKEx). Our team worked diligently to assess the feasibility and fairness of this investment.

We adopted market approach to compare the invested capital multiples of our client with those of similar listed companies in the coal-fired power sector in China. This helped us to verify the reasonableness of the consideration for initial investment. We also checked the financial budgeting of the investment, which required us to conduct a thorough research on the power generation industry in China. We looked into the government policies, the electricity market demand and supply, and the factors affecting the operational stability of the power plants. Based on our research and analysis, the expected return of investment would meet our client’s investment objectives.

We also helped our client with the valuation-related disclosures that were required by the HKEx for the approval of the major transaction after the HKEx issued a guidance letter in October to highlight the disclosure gaps in the transaction circulars. We were able to address them promptly and effectively and we were delighted and proud that our professional work was recognized and accepted by the HKEx.