Monday, July 13, 2009

Power Play: HSBC on the Coming Carnage in Power Generation

From Environmental Capital:

It’s not often that equity analysts reach back to Napoleon’s later campaigns to describe the landscape in, say, the global market for power generation technology.

Watch your back

But like the scorched-earth Russia that greeted the French army in 1812, the world’s makers of electricity-generation equipment face a foreboding landscape. A global push to change the way electricity is generated and used is forcing big equipment makers, from General Electric to Siemens, to figure out a fresh manuever....

...What’s that mean for individual companies? HSBC has some favorites—Harbin Power and Dongfang Electric of China; Siemens of Germany; Vestas of Denmark; and ABB.

Dongfang has exposure to both wind power and nuclear power, two high-growth sectors in China, HSBC says. Harbin doesn’t have wind, but is ramping up production of more efficient thermal generators which China also needs.

ABB’s global leadership in electricity transmission puts it in an enviable position to reap sales in a sector that HSBC figures should account for 50% of global power-business sales over the next five years.

Vestas, as the world’s biggest wind-turbine maker, is best-positioned to take advantage of the recovery in the wind business. Siemens seems poised, after a decade of restructuring, to deliver healthy earnings. Finally, General Electric, while not making the bank’s top-five shortlist, boasts an enviable global position in gas- and wind-power equipment....MORE