From Friday:

International Power downgraded

Shares in International Power fell in early deals as DKW downgraded the UK utility to sell from hold.

In a note to clients, Dresdner Kleinwort Wasserstein said International Power's share price is up 10% in the last week, driven by earnings upgrades and bid hopes.

Dresdner played down hopes of a bid and cautioned that the high gas prices in the wake of hurricane Wilma in the US may be temporary.

Turning to M&A talk, it believes an RWE bid is highly unlikely; the German group is selling its US water operations and seems unlikely to want to make a new investment in the region in the near term.

Nor, in its view would, RWE be interested in generation capacity in Australia, Pakistan, Malaysia, Indonesia or the Middle East, which makes up 40% of the portfolio.


And today:

Japan's Sumitomo, 2 Europe firms to start 1.3 bln usd Bahrain power project
AFX


TOKYO (AFX) -- Sumitomo Corp and two European firms will begin a 1.3 bln usd power generation and water desalinization project in Bahrain by purchasing a state-owned plant, the Nihon Keizai Shimbun reported.

In its online edition the newspaper said the completed project is expected to meet 20 pct of Bahrain's total power needs and 65 pct of its urban water demand.

The partners plan to sell electricity and water to the government for 20 years.

Sumitomo's partners are leading UK power supplier International Power and Belgian electricity company Suez Tractebel.

The three firms will set up a joint venture to manage the project, the newspaper said.

It said they will buy a power generation-water purification plant in northeastern Bahrain that can generate one mln kilowatt-hours of electricity and desalinate 135,000 tons of sea water a day.

The firms will also build a new desalination plant with a daily capacity of 270,000 tons, scheduled for completion by November 2007.

The venture will be capitalized at 260 mln usd, with Sumitomo and Tractebel each contributing 30 pct and International Power 40 pct. Any remaining costs will be covered with bank loans.

There has been bid speculation surrounding International Power, suggesting that NRG Energy (US) and possibly National Grid are looking at the electricity generating company. Interesting times ahead me thinks...

International Power eyes acquisitions, sees mid-term energy prices staying high
AFX


LONDON (AFX) - International Power's chief executive Philip Cox is bullish about the potential for making acquisitions and has predicted that the current high energy prices will continue for the medium term.

Cox told reporters today that the high prices, which drove International Power's strong interim results today, would come down in the long term but refused to give a timescale.

'Power prices are a feature of oil and gas markets so really it's a call on future oil and gas prices,' he said in a conference call. 'If you look at the medium term oil and gas (prices) will be maintained.'

Analysts have said that key risks to International Power's continuing growth are 'falling prices in the US and UK'. Brent North Sea Crude for September delivery was trading today at 77.28 usd a barrel.

The prediction allowed International Power to forecast 'strong growth' for the full year, after the company posted a jump in pretax profits in the half year to June 30 of 95 pct to 280 mln stg from 142 mln stg.

Revenue increased to 1.8 bln stg from 1.2 bln stg, while profit from operations rose 69 pct to 392 mln stg from 232 mln stg last year.

The results, which outstripped average analyst pretax profit forecasts of 244 mln stg, prompted Cox to be bullish about the potential for future acquisitions.

'We're very active about looking for acquisitions,' he said. 'We're keeping an open mind as to what is the best utilisation of our resources, and we're looking at opportunities across our portfolio. But we don't have a set budget to spend because we're not driven to make acquisitions for our business plan.'

Cox also confirmed a recent report by AFX News that International Power is looking to get involved in the anticipated new-build nuclear work forthcoming in the UK.

'We keep an eye on nuclear, particularly anything that might affect the structure of the market in the UK,' he said. 'If a potential partner with the right technical skills came forward who could complement our commercial skills then we'd be looking into it, but that should not be taken as proof that we're about to do anything in the near future.'

International Power's growth forecasts were driven by rapid growth in Europe, with profits more than doubling from 116 mln stg to 242 mln stg.

The European operations were helped by the performances of the newly acquired 1200 MW Saltend power station in Hull and the gas storage facility First Hydro, which as expected gained business following the temporary closure at Centrica's Rough Field facility in the North Sea.

newsdesk@afxnews.com

Another nice move up today - better still would be to see 325 nailed.

Can't believe queenie has backed a winner ... congratulations your majesty , said you would get the hang of it one day.

Regards

xxx

Sad little man.

It's been a good week with more to come I feel. The energy market is still in a consolidation phase and with the German giants E.ON and RWE still on the acquisition trail the future could be bright.

Careful.... the higher they go, the further and faster they can fall. Were a great buy at 80p, when nobody wanted them!

Cookin' on gas this morning :)

canary9 - always careful. I have a little knowledge of the power industry and I think things are looking good for IPR at present.

Nice and green...

International Power said it has acquired the 436 MW Levanto onshore wind farm portfolio from Christofferson Robb & Company (CRC) for an enterprise value of 567 mln eur.

It said the purchase will enhance earnings and free cash flow in the first full year of ownership.

The Levanto wind farms comprise 286 MW of capacity in operation, 126 MW under construction, which is due to commence operation in 2007, and 24 MW of fully permitted capacity, which is planned to commence operation in 2008.

The enterprise value includes the funding required to complete wind farms under construction. 409 MW of the capacity is located in Germany and 27 MW in France - two of the most favourable regulatory regimes for renewable generation, the company said.

CRC will continue to work in collaboration with International Power by supporting the business for up to three years under a services agreement.

International Power said its total equity investment will be 190 mln eur. It said 100 mln eur of this will be funded from current liquid resources and the remainder via long term vendor finance of 90 mln eur.

Tippped a play of 2007 by i few I believe>?

Momentum investors must be having a field day on IPR. What a great year to date, with more to come I believe, especially from their American assets. The future is looking very bright.

Sure is, queen 1. Have been in IPR for a few years now and, apart from the odd short-term glitch, the sp has glided nicely upwards - and gathered pace over the past few months. At first glance it may seem like a dull utility play but IPR has canny, acquisitve management, global diversity and plenty of room for expansion (and rerating). Definitely still one to tuck away, imho.

You're lucky (or astute!) paulj to have picked these up way back when. I only got in about a year ago but am still sitting on a nice paper profit. I totally agree with your synopsis and if you throw in the consolidation that affects the sector from time to time you really are looking at a winner.

Yes IPR management have done well. I held the old National Power before it was split into PowerGen (since taken over) and IPR. I did top up about 2 years ago and the shares have done me proud. I agree with pauli to the effect that the management is worth a premium. Certainly one to keep for the future.

Am having a look at this one at the moment with a view to buying for the med term. Now FTSE 100 stock & divi looks assured, with brokers currently tipping as a strong buy.
Any of you guys who held a while ago still holding or considering getting back in?
Forecast for '09:
EPS 33.56p
EPS growth +16%
Div yield 5.5%
P/E 7.4

Yes, I continue to hold HARRYCAT. I think the market worried about its debt levels but, cash flow is good and sp has begun to recover as institutions look for income.

From 10th Dec:
"Electricity generator International Power has an excellent free cash flow position. It has been growing it significantly over the past few years. The group also operates in a relatively recession-resilient market and, with a prospective yield of 4.7%, it is attractive on this front too. Group assets in the Middle East continue to perform well and the company has recently increased capacity in the region. All in all, International Power looks in a good position to weather the downturn and is well placed to grow earnings longer term. Its shares are a buy says the Telegraph."

Moved up nicely today probably in recognition of its non stg earnings, defensive qualities and the falling cost of commodity inputs.

Excellent. Slow & steady progress.

Moving up nicely, good yield 3 short term target.