\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 027 Huadian Power International Corporation Limited(600027) )
Event:
Huadian Power International Corporation Limited(600027) released the first quarterly report of 2022:
The operating revenue was 28.816 billion yuan, with a year-on-year growth rate of – 3.98%; The net profit attributable to the parent company was 617 million yuan, with a year-on-year growth rate of – 50.26%.
Key investment points:
In the first quarter, the adjustment of revenue decreased, and the profit returned to positive and improved significantly month on month. In the first quarter of 2022, the company generated 56.077 billion kwh, a decrease of 10.62% over the same period after the restatement of 2021. The main reason is that Ningxia Lingwu power plant is no longer included in the calculation scope after the asset integration in 2021, resulting in an adjusted decrease in revenue. Excluding the impact of asset integration factors, the comparable caliber of power generation and on grid power increased by 2.09% and 1.98% respectively. The proportion of market-oriented trading electricity of the company in the first quarter reached 85.75%, an increase of 21.95 percentage points compared with the whole year of 2021, realizing the simultaneous increase of volume and price of comparable caliber. Superimposed on the significant decline of thermal coal price in the first quarter compared with 2021, the net profit of the company changed from negative to positive, with a month on month increase of 7.2 billion.
Share in coal enterprises, increase investment income, subscribe for Fuxin development and expand the layout of new energy. In the first quarter of 2022, the company’s investment income was 1.179 billion yuan, with a year-on-year increase of 518.09%. The joint ventures were mainly Fuxin development (31%), Huadian coal industry (13%) and Ningxia Yinxing coal industry (50%). In the first quarter of 2022, the coal price was high, and the net profit of Huadian coal industry in the first quarter was 1.89 billion yuan, with a year-on-year increase of 222%, thickening the company’s investment income. In addition, the company shares in Huadian Fuxin development, a new energy enterprise. Since June 2020, Fuxin development has completed the reorganization of wind power assets with a total installed capacity of 25 million KW and a total assets of nearly 170 billion yuan, becoming one of China’s leading new energy power generation operators, and is expected to further increase profits for Huadian Power International Corporation Limited(600027) by taking advantage of the east wind of new energy.
The compliance rate of coal production and supply increase agreement was improved, and the profit in the second quarter is expected to be further improved. In the first quarter, coal production and supply increased. In 2022q1, China’s raw coal output was 1.084 billion tons, a year-on-year increase of 10.3%, of which 396 million tons were achieved in March, a year-on-year increase of 14.8%. In April, the national Standing Committee proposed to increase the coal production capacity by 300 million tons, and the subsequent spot price of coal is expected to move further downward. In addition, the coal long-term association price will be implemented from May 1, and the improvement of the performance rate of the long-term association will further pressure on the cost side. It is estimated that assuming that the proportion of long-term cooperation increases by 10% and the cost of coal-fired electricity decreases by about 0.02 yuan / kWh, if the power generation in the second quarter is the same as that in the same period last year, Huadian Power International Corporation Limited(600027) second quarter may release a net profit of 530 million yuan, and the profit is expected to be further improved.
Profit forecast and investment rating Huadian Power International Corporation Limited(600027) is one of the largest comprehensive energy companies in China. The downward trend of coal price in the second quarter combined with the increase of the proportion of long-term cooperation is expected to significantly improve the company’s profit. We estimate that the operating revenue of the company from 2022 to 2024 will be 105238/107945/111751 billion yuan respectively, with a year-on-year growth rate of 1% / 3% / 4%, the net profit attributable to the parent company will be 3.977/45.97/5.063 billion yuan respectively, with a year-on-year growth rate of 180% / 16% / 10% respectively, and the PE from 2022 to 2024 will be 9.33/8.07/7.33 respectively. It will be covered for the first time and given a “buy” rating.
Risks suggest macroeconomic downturn; Risk of policy change; Coal price fluctuation risk; Electricity demand is less than expected; Risk of electricity price decline.
