\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 011 Huaneng Power International Inc(600011) )
Core view
Event: Huaneng Power International Inc(600011) released the annual report. In 2021, the company achieved an operating revenue of 204605 billion yuan, a year-on-year increase of + 20.75%; The net profit attributable to the parent company was -10.264 billion yuan, a year-on-year increase of -324.85%, and the net profit attributable to the parent company after deduction of non-profit was -12.558 billion yuan, a year-on-year increase of -385.57%. Basically consistent with expectations.
Comments:
The installed capacity, power generation hours and on grid electricity price increased simultaneously, driving the significant growth of power generation and income. In 2021, the national demand for electricity was strong, and the company’s installed capacity of controllable power generation increased by 4.7% year-on-year to 118.7gw; The annual average utilization hours of domestic power plants were 4058 hours, an increase of 314 hours year-on-year. The growth of installed capacity and power generation hours led to a significant increase in power generation. In 2021, the company’s operating power plants in China completed 457336 billion kwh according to the consolidated statement, a year-on-year increase of 13.2%. Meanwhile, the domestic average on grid settlement price increased by 4.41% year-on-year to 431.88 yuan / MWh, and the double rise of volume and price led to a significant increase in revenue. In 2021, the company achieved an operating revenue of 204605 billion yuan, an increase of 20.75% year-on-year.
Affected by the high coal price, the performance loss is serious. In the second half of 2021, affected by multiple factors, China’s energy supply and demand was tight and coal prices rose sharply. As coal is the main fuel for the company’s thermal power generation, the high coal price has led to a sharp increase in the company’s fuel cost. In 2021, the company’s comprehensive purchase price of raw coal was 770.67 yuan / ton, a year-on-year increase of 60.85%; Domestic fuel costs totaled 146539 billion yuan, up 64.7% year-on-year. The sharp increase of fuel cost makes the company’s cost growth significantly higher than the revenue growth, and the company has serious losses.
The company’s performance is expected to reverse due to the superposition of new energy and coal price control. The installed capacity of the company’s wind power generation continues to increase. By the end of 2021, the proportion of clean installed capacity has increased to 22.4%. In the future, the company will still vigorously strengthen the construction of new energy such as scenery. It is expected that the installed capacity of new clean energy will reach 40gw during the 14th Five Year Plan period, and the proportion of profits from clean energy power generation will increase significantly in the future. At the same time, the national development and Reform Commission recently issued the notice on further improving the coal market price formation mechanism, and held several meetings to increase supply and control coal prices. Under the strong policy supervision, coal prices are expected to return to a reasonable range. Under the dual effects of the company’s clean energy transformation and the decline of coal prices, the company is expected to end its losses and start a new profit cycle.
Profit forecast and investment rating: it is predicted that from 2022 to 2024, the company’s revenue will be 2119.5 /, 217.65/220.29 billion yuan respectively, with a year-on-year increase of 3.6% / 2.7% / 1.2%; The net profit attributable to the parent company was 4.61/6.09/7.41 billion yuan respectively, with a year-on-year growth rate of – / 32.2% / 21.6% respectively; Based on today’s closing price, PE is 26.8 / 20.3 / 16.7 times respectively, giving the company an overweight rating.
Risk warning: the decline of coal price is less than expected; The rise of electricity price is less than expected; The company’s new energy construction is not as expected.
