(Yicai) June 13 -- Shares of Gepic Energy Development rose after the Chinese green energy producer got the go-ahead to buy a controlling stake in a highly profitable thermal power firm owned by its parent company for CNY7.6 billion (USD1 billion).

Gepic [SHE: 000791] closed 4.6 percent higher at CNY6.84 (USD1) a share in Shenzhen today, bringing its gain to 23 percent so far this year.

The sole listed unit of Gansu Province Electric Power Investment Group won approval from the provincial state-owned assets manager to buy 66 percent of a firm called Changle by means of a CNY1.9 billion private placement of shares and cash, Lanzhou-based Gepic said yesterday.

The new asset should help lift profitability at the provider of hydroelectric, wind, and solar power. Changle’s net profit jumped 51 percent to CNY1 billion last year, nearly twice as much as Gepic’s earnings, while its operating income climbed 20 percent to CNY4.3 billion.

The related-party deal and the resulting expansion of Gepic's business scope are aimed at removing horizontal competition within the group. Gansu Province Electric said earlier that after transferring its renewable energy assets to Gepic, it would do the same for its thermal power and other electricity generation assets by Dec. 27, next year.

Industry sources said the addition of Changle will boost Gepic’s power output. Gepic generated 8.6 billion kilowatt hours of power last year, or around 92 percent of its annual target, failing to meet its goal for the third straight year, according to data released in March.

Editor: Emmi Laine