Huaneng International (600011): Slight increase in revenue due to price reductions and slight increase in costs caused a significant increase in profits
Event Overview On October 22, 2019, the company released the third quarter of 2019 report: the company achieved operating income of 1272 in the first three quarters of 2019.
32 ppm, an increase of 0 in ten years.
99%; net profit attributable to shareholders of listed companies is 53.
89 ppm, a 170-year increase.
Basic income is 0.
32 yuan, an annual increase of 166.
Analysis and judgment: The increase in volume and price caused a slight increase in revenue. The decline in power generation in the second quarter narrowed the company’s first three quarters of 2019, and the electricity sales were 3021.
8.9 billion degrees, down 7 each year.
52% / 6.
However, in the first three quarters, the company’s average on-grid settlement price for each operating power plant in China was 417.
69 yuan / MWh, an increase of 0 in ten years.
14%. Under the background of volume reduction and price increase, the company achieved operating income of 1272 in the first three quarters.
32 ppm, an increase of 0 in ten years.
The company’s power generation in the first three quarters decreased by a total of 24.6 billion kWh compared to last year, of which Q1 / Q2 / Q3 had 武汉夜网论坛 generated less power in the past year than 4.
At 7.7 billion kWh, the decline in power generation in the third quarter has tended to narrow.
The provinces in which thermal power generation decreased in the second quarter include Henan, Jiangsu, Guangdong and Shanghai. The total reduction in the three provinces and one city accounted for 59% of the total reduction in the second quarter. The thermal power generation in the third quarter occurred.The provinces where competitors fell were Shandong Province and Henan Province, which respectively accounted for 69 of the second quarter’s reduction.
6% and 13.
In the above provinces, except Henan Province, all of them belong to the provinces where the internal power transmission input is short-circuited. Under this impact, the local thermal power generation unit ‘s power generation has decreased significantly.
Take Shandong Province as an example. In 2018, the province’s power grid was connected to 70 billion kilowatt-hours of external electricity, which accounted for about 15% of the total power consumption of the entire network. This proportion is still further increasing this year. Affected by this, the company ‘sCoal-fired generating units generated 6.7 billion kWh less electricity in the third quarter of this year, which was a drag on the growth rate of listed companies’ overall power generation.
The decline in the cost of thermal coal caused a large increase in profit, and the company’s installed structure continued to optimize. The company’s operating income in the first three quarters increased slightly by zero.
In 99% of cases, net profit attributable to mothers increases by 170 per year.
95%, initially the cost of thermal coal prices down.
In the first three quarters, the company’s coal power accounted for 84% of the total power generation. The average domestic coal price in the first three quarters (Qinhuangdao Port 5500 kcal thermal coal) was 598.
18 yuan / ton, compared with the average price of 654 in the same period last year.
13 yuan / ton down 8.
56%, the cost side is better controlled due to the decline in coal prices.
In addition, the company has better bargaining power by taking advantage of its own scale advantage. The proportion of long-term associations and the high redemption rate, and the company’s simultaneous reduction in thermal power generation costs, have directly led to a significant increase in profit margins and net profit margins.
At the end of the coal power pricing negotiation, a warm-up period has been entered. In the context of electricity price reform, power companies are expected to reduce prices and pressure is expected to be significant. From the demand side to the supply side, the pressure on coal prices is expected to increase.
The report summarizes that the company’s wholly-owned Huaneng Liaoning Yingkou Thermal Power Wind Power Plants12.
5MW, 60% of Huaneng Henan Ouchi Wind Farm projects total 6MW and 96%.52% of Huaneng Henan Select Kiln Wind Farm projects totaling 14 MW were put into production respectively.
As of September 30, 2019, the company’s controllable power generation installed capacity was 106,169 MW, and equity power generation installed capacity was 93,766 MW, of which natural gas, hydropower, wind power, solar power and biomass power generation accounted for about 16 of clean power installed capacity.
1%, the company accelerated towards the goal of continuously optimizing the installed structure.
The marketization of power trading has been steadily progressing, and the scarcity of high-quality power generation assets highlights the company’s settlement of market-based trading power in the first three quarters of 1464.
7.1 billion kWh, the proportion of trading electricity is 51.
23%, an increase of 10 over the same period last year.
87 units, the marketization ratio has further increased.
At the end of September, the State Council executive meeting decided that from January 1, 2020, the coal-electricity price linkage mechanism will be cancelled for coal-fired power generation that has not yet achieved market-based transactions. The benchmark on-grid electricity price mechanism will be established and changed to “base price + up and down””” Market-oriented mechanism.
From the point of view of impact, the most directly affected by this should be the thermal power industry.
Against the background of the current decline in the growth rate of electricity demand and the excess installed capacity of thermal power in the whole society, comprehensively promoting the market-oriented trading of thermal power will promote the decline in electricity prices to a certain extent. In the short term, the profit space of thermal power companies will be compressed.
The competitive advantages of integrated power generation companies that span multiple fields such as thermal power, hydropower, wind power, etc. are obvious. At the same time, large-scale thermal power companies with strong cost advantages have obvious advantages, and plant profit differentiation will intensify. This may be the supply side of the power industry.Reform, optimistic about the scale advantages and cost control advantages of leading enterprises.
Investment suggestion: As the industry leader, under the circumstances of the growth rate of power generation in the second and third quarters, through controlling fuel costs and other means, the company can obtain the replacement of its net profit in the first three quarters.
95% rapid growth.
Although the thermal power industry has expectations of comprehensively promoting market-oriented transactions, the company, as a leading enterprise with clean energy installed capacity accounting for over 16%, and able to better control the cost of thermal coal procurement, will still have obvious advantages in future competition.
We estimate that the company EPS for 2019-2021 will be 0.
63 yuan / share, corresponding to PE, 13, 10, and 9 times, respectively, covering for the first time, giving an “overweight” rating.
Risk reminders: 1) The trend of thermal coal price is reversed; 2) The growth rate of electricity consumption in the whole society is less than expected; 3) The subsidy price has fallen sharply during the process of power marketization.