Beijing was built into an industrial city in China’s previous command economy. Due to improper urban planning, plenty of heavy polluting factories clustered around the capital city. The worsening environment has prompted the government to highlight Beijing-Tianjin-Hebei, or the greater Beijing region, in its pollution control plan.
After days of northerly wind, Beijing was again shrouded in haze on Nov. 21. The persistent bad weather not only threatens the health of residents but also holds back expat talent. Therefore, the municipal government is determined to step up measures to improve the air quality, with the related budget being boosted to 15 billion yuan (US$2.46 billion) for next year from this year’s figure of 8 billion yuan.
One of the efficient ways to improve the atmospheric condition is to forcefully reduce the ratio of coal-fired power generation in the city. A major beneficiary of this move will be Beijing Jingneng Clean Energy (00579.HK).
Jingneng is the key gas-fired power supplier in the city. Although coal-fired electricity is more profitable to power plants, gas-fired power is nevertheless more environment-friendly. The company is poised to tap into the growing demand for green energy in the years to come. Backing from its controlling shareholder, the Beijing municipal government, will definitely help.
Jingneng shares have surged 130 percent this year, but the counter still trades at just 15 times the estimated 2013 earnings.
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