By Yongchang Chin
Shares of CLP Holdings Ltd. fell in early trading Tuesday after the power company said it would swing to a loss in the first half due to “challenging and extreme” energy market conditions amid elevated wholesale electricity prices in Australia.
Hong Kong-listed CLP shares dropped 5.9% to 68.25 Hong Kong dollars (US$8.69), putting it on track for its biggest one-day decline in more than two years. Shares are down 13% year to date.
CLP said Monday that fair-value losses from its Australia unit were about HK$7.2 billion in the first five months of the year, taking consolidated operating losses to HK$3.7 billion over the period. It said it now expects to post a consolidated loss for the first half of 2022, reversing from profit of HK$4.615 billion in the same period last year.
Power-generation output from one power station in Australia was affected by forced outages, while another had lower-than-expected coal deliveries, CLP said. This meant that the business was short to its contract positions and had to buy electricity in the high-priced spot market to cover the deals, CLP said.
Over the longer term, the company said Australia’s elevated wholesale electricity prices would likely boost earnings at its local unit, “provided [the unit] can purchase fuel as required, [and] generate and dispatch electricity at the higher prices.”
Write to Yongchang Chin at yongchang.chin@wsj.com
Investors ought to take advantage of low prices for a long-term view.
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