Areva in advanced talks to sell 2 nuclear reactors in China - source - UPDATE |
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Thu, 01 Feb 2007 14:23
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(updates with more details of project in China; more analysts' comment)PARIS (AFX) - Nuclear energy group Areva is in 'advanced discussions' to sign a deal to supply two third generation reactors in China, a source close to the matter told AFP.CEO Anne Lauvergnon, who was in China at the end of last week, has just signed a memorandum of understanding to supply two of the company's European pressurised water reactors to China's CGNPC (China Guangdong Nuclear Power Corp), Le Figaro newspaper reported this morning.'Areva is holding advanced discussions in China' and these 'have intensified', the source told AFP, without being able to confirm that an MoU has been signed.An Areva spokesman had no comment.Le Figaro, without citing sources, said the agreement between Areva and CGNPC envisages the establishment of a global partnership, including uranium supply.The newspaper estimated the value of the deal at several billion euros.Areva in mid-December lost a bid to build four third generationreactors in China, when the contract was awarded to Toshiba Corp unit Westinghouse.The first EPR reactor, currently under construction in Finland, is worth around 3 bln eur.However, work on that project, Olkiluoto 3, is 18 months behind schedule and Areva warned in December that full year operating profit will be clearly lower than in 2005 because of provisions for the delay.The reactor is now scheduled to start operations in 2010-11.Electricite de France announced last week that it will order an EPR reactor from Areva, to be built at Flamanville, France, where construction work is expected to start around the end of this year and the reactor to start operating in 2012.Areva said last night it expects a 'sharp increase' in sales in 2007, after fourth-quarter sales jumped 5.2 pct.Full-year 2006 sales were 10.683 bln eur, up 7.3 pct from 10.125 bln, a rise of 6.7 pct on a like-for-like basis.At 1.42 pm, Areva investment certificates were up 2.85 pct at 632.50 eur.CM-CIC Securities upgraded Areva to 'Add' from 'Sell' and raised its target price to 691 eur, in the belief that the 'market will now be less preoccupied with Finland and much more with what is happening in Asia.'It is excellent news for the group, which is now assured of selling its EPR (European Pressurised Water reactor) in significant quantities in the next 30 years,' Patrice Lambert-de Diesbach of CIC said in a note to clients.Analysts at Kepler Equiries kept a 'Reduce' recommendation and 420 eur target price, noting that fourth quarter sales fell 4 pct in the reactor and services division, hit by delays in the Olkiluoto 3 project in Finland.The 'main trigger' for Areva's sales growth was the transmission and distribution division, which posted a 15.2 pct like for like increase for the full year and 21 pct for the last quarter, the Kepler analysts said.Arnaud Schmit of Natexis Bleichroeder raised his target price to 410 eur from 360.'We are nonetheless sticking to our 'Sell' rating, which hinges mainly on the fact that the stock is overvalued, a situation fuelled by Arevas very low free float and the anticipated deterioration in free cash flow in 2006 and 2007 tied to the Olkiluoto 3 project,' the analyst said.Andrew.Newby@thomson.coman/anCOPYRIGHTCopyright AFX News Limited 2006. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
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Areva opens unit to manage DOE work 