\u3000\u3000 Huaneng Power International Inc(600011) (600011)
Report summary
The company is the largest national comprehensive power listing platform under Huaneng Group. The company’s main business is to develop, build and operate large-scale power plants, distributed energy projects and their supporting coal mines, ports, shipping, pipeline transmission, incremental distribution network and other facilities outside China by using modern technology and equipment and foreign funds, and sell electric and thermal products to power grid operation enterprises, industrial and residential users in their respective places, And provide users with comprehensive energy services. The company’s revenue mainly comes from power and thermal business, and the installed structure of power generation is mainly thermal power. The controlling shareholder of the company is Huaneng Group. The shareholders have strong resources and capital advantages, which is conducive to the development of Fengguang clean energy business of the company. At present, the company is actively carrying out new energy transformation, and the installed capacity of Fengguang new energy power is growing rapidly.
The profit of thermal power sector is expected to be repaired, providing support for the development of new energy business. High coal prices have led to rising fuel costs and serious losses in the company’s thermal power business. The state has issued a number of coal supply guarantee policies to guide coal prices to return to a reasonable price range, and the cost side pressure of the company is expected to be relieved. At the same time, the market-oriented reform of electricity price continues to advance, the market-oriented transaction electricity price rises, and the company’s thermal power business profit is expected to hit the bottom and rebound. Overall, the dark hour of thermal power has passed, which will provide support for the company’s new energy transformation.
Actively transform new energy, and the proportion of new energy installed capacity continues to increase. At present, the focus of the company’s business is to accelerate the development of Fengguang new energy power generation business. By 2020, the installed capacity of new energy accounted for 10.34%. In 2021, the newly added holding installed capacity was 5.23gw, the newly added installed capacity of Fengguang was 3.20gw, and the proportion of Fengguang revenue was increasing. It is expected that with the gradual production of new energy assets, the new energy business will exert its force, bringing new profit growth points to the company. According to the company’s plan, it is expected that 8GW of new energy power generation assets will be added annually during the 14th Five Year Plan period, and the installed capacity of Fengguang clean energy is expected to maintain a rapid growth trend, bringing new performance increment to the company.
Investment suggestion: it is estimated that the operating revenue of the company from 2021 to 2023 will be 177.913 billion yuan, 208.188 billion yuan and 215.196 billion yuan respectively, with a year-on-year increase of 5.00%, 17.02% and 3.37% respectively. The net profit attributable to the parent company will be -10.033 billion yuan, 8.025 billion yuan and 10.786 billion yuan respectively, with a year-on-year increase of -319.77%, 179.99% and 34.41% respectively. The corresponding EPS will be -0.64, 0.51 and 0.69 times respectively, and PE will be -12.03, 15.04 and 11.19 times respectively. As a thermal power transformation new energy operation enterprise, the current stock price of the company is undervalued. In the future, with the reduction of fuel cost and the gradual production of new energy, the company is expected to turn losses into profits and maintain the growth trend of performance. For the first time, give the company a “buy” rating.
Risk tip: there are risks of rising coal prices, falling electricity prices, and the installed growth rate of new energy such as Fengguang is lower than expected. There may be risks of information lag or untimely update of the public data used in the research report.
