Introduction
Huaneng Power International was created in 30 June 1994 (Hpi.com.cn, 2015) as a spin-
off of Huaneng Power International Development Corporation (HPIDC), which was also its
controlling shareholder (White, 2004, p.7). The newly formed company’s aim to construct and
operate power plants of high technology (Hpi.com.cn, 2015) could be achieved only through
raising capital. Since “domestic sources were insufficient” (White, 2004, p.2), HPI opted for
international financing through global equities.
1. What are alternatives for HPI to raise money? How did they raise money? Why did
they use the NY SE and not the HKSE?
There were several possibilities of raising capital for HPI, yet most of them did not
satisfy all the …show more content…
And while other PRC companies had chosen the Hong
Kong market to raise capital (White, 2004, p.2), the results had been mixed, proving that perhaps
the timing was not the best.
Whereas HPI was interested in investing money overseas, foreign investors were unsure
about their interest in HPI. Arguments for and against can be analyzed using the Mini MBA
PEST analysis (Quickmba.com, 2015). First of all, the PRC had embraced a stable political
system for years, but the continuation of this stability was being questioned by leader Xiaoping’s
worsening health (White, 2004, p. 4). In addition, the PRC’s legal system would prevent
investors from bringing foreign court judgements to its courts (White, 2004, p.5). Economically,
HDI as a part of HPIDC had a profitable history, with a net income of 52.733.000 $ in only the
first 6 months, compared to 96.169.000 $ throughout all the year 1993 (Exhibit 9). Nevertheless,
the macroeconomic environment was endangered by worries over instability of the currency and
a growing inflation of 13% in 1994 compared to 5.4% in 1992 (Exhibit 2). In terms of
technology, all of the power plants used foreign equipment and technology …show more content…
3. What criteria are important in determining the market for this firm’s stock?
Companies are influenced by so many factors that it is practically impossible to develop a
formula for predicting success of investments (Investopedia, 2015). Nonetheless, a basic method
of stock-picking, fundamental analysis looks at 3 levels (En.tradehero.mobi, 2013). The
economy level (En.tradehero.mobi, 2013) would focus on a China’s economic indicators such as
the expanding GDP and rising inflation. The company level would consider HBI’s potential
through a review of the consistency of its growth. Using changes in net worth, interest rates, and
capital in the last 5 years (Exhibit 12), the company could determine its prospective to expand.
Lastly, the industry level would assess market size and competitiveness
(En.tradehero.mobi, 2013), determining the weaknesses and strengths of the market as well
studying the performance of existing companies in the area. A financial comparison of power
generating companies (Exhibit 14) would help determine the survival rate of HBI among them.
Conclusion
The case of Huaneng Power International is a clear example of how big firms turn
Huaneng Power International was created in 30 June 1994 (Hpi.com.cn, 2015) as a spin-
off of Huaneng Power International Development Corporation (HPIDC), which was also its
controlling shareholder (White, 2004, p.7). The newly formed company’s aim to construct and
operate power plants of high technology (Hpi.com.cn, 2015) could be achieved only through
raising capital. Since “domestic sources were insufficient” (White, 2004, p.2), HPI opted for
international financing through global equities.
1. What are alternatives for HPI to raise money? How did they raise money? Why did
they use the NY SE and not the HKSE?
There were several possibilities of raising capital for HPI, yet most of them did not
satisfy all the …show more content…
And while other PRC companies had chosen the Hong
Kong market to raise capital (White, 2004, p.2), the results had been mixed, proving that perhaps
the timing was not the best.
Whereas HPI was interested in investing money overseas, foreign investors were unsure
about their interest in HPI. Arguments for and against can be analyzed using the Mini MBA
PEST analysis (Quickmba.com, 2015). First of all, the PRC had embraced a stable political
system for years, but the continuation of this stability was being questioned by leader Xiaoping’s
worsening health (White, 2004, p. 4). In addition, the PRC’s legal system would prevent
investors from bringing foreign court judgements to its courts (White, 2004, p.5). Economically,
HDI as a part of HPIDC had a profitable history, with a net income of 52.733.000 $ in only the
first 6 months, compared to 96.169.000 $ throughout all the year 1993 (Exhibit 9). Nevertheless,
the macroeconomic environment was endangered by worries over instability of the currency and
a growing inflation of 13% in 1994 compared to 5.4% in 1992 (Exhibit 2). In terms of
technology, all of the power plants used foreign equipment and technology …show more content…
3. What criteria are important in determining the market for this firm’s stock?
Companies are influenced by so many factors that it is practically impossible to develop a
formula for predicting success of investments (Investopedia, 2015). Nonetheless, a basic method
of stock-picking, fundamental analysis looks at 3 levels (En.tradehero.mobi, 2013). The
economy level (En.tradehero.mobi, 2013) would focus on a China’s economic indicators such as
the expanding GDP and rising inflation. The company level would consider HBI’s potential
through a review of the consistency of its growth. Using changes in net worth, interest rates, and
capital in the last 5 years (Exhibit 12), the company could determine its prospective to expand.
Lastly, the industry level would assess market size and competitiveness
(En.tradehero.mobi, 2013), determining the weaknesses and strengths of the market as well
studying the performance of existing companies in the area. A financial comparison of power
generating companies (Exhibit 14) would help determine the survival rate of HBI among them.
Conclusion
The case of Huaneng Power International is a clear example of how big firms turn