Huaneng International (600011) Annual Report Comments: Multi-factors cause 18-year performance pressure, waiting for coal prices to fall and new energy projects put into operation

Event: According to the annual report disclosed by the company, the operating income in 2018 was 1698.

61 ppm, an increase of 11 years.

04%; net profit attributable to mother 14.

39 trillion, a decrease of 17 a year.

42%.

For the fourth quarter alone, the company achieved revenue of 438.

72 ppm, a five-year increase of 5.

57%; net profit attributable to mother -5.

5 billion.

The preliminary results were significantly lower than the same period last year, and the results were slightly higher than expected.

The increase in utilization hours and installed capacity and the increase in electricity prices were the main reasons for revenue growth.

According to the announcement, the company’s power generation in 2018 increased by 9 per year.

12%, providing a short ten-year growth of 22.
.

73%, maintaining a strong growth momentum.

Considering that the scale of increasing domestic thermal power units has been larger in the past two years, the power consumption of the whole society has maintained a rapid growth. The increase in power generation is mainly due to the increase in utilization hours and the consolidation of generators.

The average utilization hours of the company’s domestic power plants was 4,208 hours, exceeding 257 hours, of which the coal-fired unit utilization hours were 4,340 hours, an increase of 146 hours.

In terms of installed capacity, the company’s new production capacity in 2018 totaled 653 MW, and wind power and photovoltaic were 482 MW and 171 MW, respectively.

In addition, since July 1 last year, coal-fired power units have increased their benchmark electricity prices by 1-2 cents / Kwh, and coal-fired generating units have benefited significantly.

In 2018, the average on-grid settlement electricity price of the company’s domestic power plants was 418.

48 yuan / MWh, an increase of 1 in ten years.

08%.

Factors such as rising fuel prices, increasing the marketization of electricity, increasing manpower expenditures and declining investment income have dragged down the company’s performance.

According to the announcement, in terms of fuel costs, in 2018 the company’s planned unit unit fuel cost for electricity sales was 236.

89 yuan / MWh, an increase of 4 in advance.

85%, fuel costs increased by 118 over the same period last year.

At $ 12 million, coal prices exceed the corresponding increase in fuel costs by a corresponding increase of 20.

At 98 ppm, fuel costs associated with rising electricity have increased by 88.

2.4 billion.

The marketization of power has been steadily advancing. In 2018, the company’s market-based power increased by nearly 50 billion kWh each year. Considering that the discount of market-based power was 3-4 cents / Kwh, it partially lowered the company’s on-grid tariff.

At the same time, the company’s labor costs and management expenses increased by 10 compared with the same period last year.

73 ppm and 2.

900 million.

In terms of investment income, investment income for the same period last year was 21.

7ppm, only 15 in 2018.

700 million.

In addition, other factors have also contributed to the expected performance.

From January 1, 2018, the company started to pay more environmental protection taxes and the length of the fee-for-tax reform trials. The company’s environmental protection tax and length tax were increased by 2 respectively.
600 million and 1.
10,000 yuan.

Many factors have caused the company’s performance to be lower than expected.

The completion of the A-share fixed increase has been successfully completed, waiting for the commissioning of large-scale wind power projects and the decline in coal prices to drive performance growth.

The company issued an announcement on October 17, 2018, and successfully completed the A-share fixed increase, issuing 4.

9.8 billion shares and raised funds 32.

US $ 600 million, which is mainly invested in Guangdong Xiegang Gas Turbine Project, Jiangsu Dafeng Offshore Wind Power Project, Henan Yingchi Fenghuangshan Wind Power Project, Anhui Longchi Wind Power Project, Hainan Yangpu Thermal Power Project, and Jiangxi Ruijin Phase II Thermal Power Project, with additional installed capacityWith an installed capacity of 3.9 million kilowatts, the company’s 杭州桑拿网 installed capacity is expected to further increase.

According to the company’s business plan, the capital expenditure plan for wind power in 2019 is $ 24 billion, an annual increase of 240%.

In terms of coal prices, due to higher-than-expected power consumption and thermal coal demand in 2018, coupled with environmental protection, safety inspections and other factors affecting the release of high-quality coal, imported coal has also been restricted to a certain extent, resulting in continued high coal prices.

If the macroeconomic operation remains stable and weak in the later period, coal demand will gradually weaken, and the successive release of coal production capacity and the easing of coal imports will limit coal prices to quickly return to the green and reasonable range. The company’s thermal power accounted for a high 苏州桑拿网 proportion of coal prices.The elasticity is expected to benefit directly from the decline in coal prices.

In addition, the company’s cash flow is better. Under the background of the government’s strict control of additional installed capacity, new capital expenditures are small and continuous dividends are guaranteed.

According to the announcement, the company promises that the annual cash dividend will be no less than 70% of distributable profits and that certain dividends will not be less than zero.

1 yuan, highlighting its defensive function.

Investment recommendation: Overweight-A investment rating, 6-month target price of 7.

5 yuan.

We estimate that the company’s revenue growth from 2019 to 2021 will be 10%, 8%, and 6%, respectively, and the net profit attributable to the mother will be 31.

500 million, 55.

9 ppm and 84.

300 million, optimistic about the company’s performance improvement.

Risk reminder: the risk of electricity price reduction, the growth rate of electricity consumption in the whole society exceeds expectations, and coal prices continue to be high.