Coal Electricity Price Double Extrusion Huaneng International Operating Pressure Increases Sharply
As a leader in domestic thermal power listed companies, Huaneng Power underscored the dual pressure of lowering the price of electricity in some power plants and keeping coal prices high. Despite Huaneng Power’s support from overseas companies such as Singapore’s Tuas Energy, the company's main business is still on the edge of break-even in the third quarter of this year. The industry believes that if the price of electricity is not raised, the operating conditions in the third quarter have been maintained, and its operations in the fourth quarter and next year will be even less optimistic.
According to statistics, the cumulative power generation of Huaneng Power's domestic power plants in the first three quarters reached 236.4 billion kWh, a year-on-year increase of 24%. With the increase in on-grid electricity prices, revenues rose by 30% year-on-year, which is higher than the growth rate of power generation. However, due to the renewed rise in coal prices after the increase in electricity prices, the company’s cost growth exceeded revenue growth by 3.5%. The results of the increase in electricity prices were all swallowed up.
In the first three quarters of this year, the total profit of domestic power plants was negative after the profits earned by Huaneng Power were deducted from the positive income contributed by Tuas Power. The company's coal-fired power projects have a loss of 40% to 50%. Except for the profitability of projects in East China and Southeast China coastal areas, the thermal power projects in other regions only achieve low profit or loss. It is worth noting that, since September of this year, the demand for electricity from coastal power plants has dropped, which has also hit the company’s revenue.
In fact, Huaneng Power's single-quarter gross margin since this year has been below 10%. Among them, the company's single-quarter gross margin in the third quarter was only 7.87%, down 4% from the same period last year. Regardless of the contribution of electricity price compensation in 2010, the company’s gross profit margin in the second quarter was about 9.6%. Therefore, the company's gross profit margin in the third quarter decreased by approximately 1.7%. Consolidating its various period expenses, it is almost approaching the break-even point again. The reporter noticed that similar situations also occurred in Huadian Power International (600027) and Datang Power Generation (601991). The gross profit margin of Huadian Power's largest single-quarter thermal power business accounted for only 6.39%.
The rise in coal prices is the main reason for Huaneng International’s gross margin drop. From Qinhuangdao market coal price point, since late September, with the advent of coal season, Qinhuangdao coal prices have re-entered the rising channel. The average price of 5,500 kcal Shanxi excellent blends rose by about RMB 12/t from the second quarter. The market generally believes that with the advent of the northern heating season, the impetus for coal prices in the Qinhuangdao market continues to rise. Even if Qinhuangdao market coal prices remain unchanged, the average price in the fourth quarter has risen by about 50 yuan/ton from the third quarter. According to estimates, this will swallow Huaneng International’s profits of several hundred million yuan.
Financial expenses are another big mountain that is weighed against power generation companies. In the first three quarters of the year, Huaneng International’s financial expenses increased by 50% year-on-year to 5.57 billion yuan. With the increase in the debt ratio and the increase in interest rates, the company's financial expenses have experienced an increase of 5.3% in the third quarter of this year, and the unfavorable situation of high-leverage operations in the interest rate hike cycle will continue.
Huaneng Power's 2011 third quarter results show that the company achieved sales revenue of 99.8 billion yuan in the first three quarters, an increase of 30% year-on-year; its main business cost was 90.7 billion yuan, an increase of 33.5%; and its net profit attributable to listed companies was 1.41 billion yuan, year-on-year Reduced by 55.2%; equivalent to 0.10 yuan per share. In the third quarter of this year, the company achieved a sales revenue of 35.8 billion yuan, an increase of 28% year-on-year; the main business cost was 32.9 billion yuan, an increase of 34% year-on-year; the net profit attributable to the listed company was 230 million yuan, a year-on-year decrease of 79%; The income is 0.02 yuan, which basically achieves break-even after deducting non-recurring gains and losses.
According to statistics, the cumulative power generation of Huaneng Power's domestic power plants in the first three quarters reached 236.4 billion kWh, a year-on-year increase of 24%. With the increase in on-grid electricity prices, revenues rose by 30% year-on-year, which is higher than the growth rate of power generation. However, due to the renewed rise in coal prices after the increase in electricity prices, the company’s cost growth exceeded revenue growth by 3.5%. The results of the increase in electricity prices were all swallowed up.
In the first three quarters of this year, the total profit of domestic power plants was negative after the profits earned by Huaneng Power were deducted from the positive income contributed by Tuas Power. The company's coal-fired power projects have a loss of 40% to 50%. Except for the profitability of projects in East China and Southeast China coastal areas, the thermal power projects in other regions only achieve low profit or loss. It is worth noting that, since September of this year, the demand for electricity from coastal power plants has dropped, which has also hit the company’s revenue.
In fact, Huaneng Power's single-quarter gross margin since this year has been below 10%. Among them, the company's single-quarter gross margin in the third quarter was only 7.87%, down 4% from the same period last year. Regardless of the contribution of electricity price compensation in 2010, the company’s gross profit margin in the second quarter was about 9.6%. Therefore, the company's gross profit margin in the third quarter decreased by approximately 1.7%. Consolidating its various period expenses, it is almost approaching the break-even point again. The reporter noticed that similar situations also occurred in Huadian Power International (600027) and Datang Power Generation (601991). The gross profit margin of Huadian Power's largest single-quarter thermal power business accounted for only 6.39%.
The rise in coal prices is the main reason for Huaneng International’s gross margin drop. From Qinhuangdao market coal price point, since late September, with the advent of coal season, Qinhuangdao coal prices have re-entered the rising channel. The average price of 5,500 kcal Shanxi excellent blends rose by about RMB 12/t from the second quarter. The market generally believes that with the advent of the northern heating season, the impetus for coal prices in the Qinhuangdao market continues to rise. Even if Qinhuangdao market coal prices remain unchanged, the average price in the fourth quarter has risen by about 50 yuan/ton from the third quarter. According to estimates, this will swallow Huaneng International’s profits of several hundred million yuan.
Financial expenses are another big mountain that is weighed against power generation companies. In the first three quarters of the year, Huaneng International’s financial expenses increased by 50% year-on-year to 5.57 billion yuan. With the increase in the debt ratio and the increase in interest rates, the company's financial expenses have experienced an increase of 5.3% in the third quarter of this year, and the unfavorable situation of high-leverage operations in the interest rate hike cycle will continue.
Huaneng Power's 2011 third quarter results show that the company achieved sales revenue of 99.8 billion yuan in the first three quarters, an increase of 30% year-on-year; its main business cost was 90.7 billion yuan, an increase of 33.5%; and its net profit attributable to listed companies was 1.41 billion yuan, year-on-year Reduced by 55.2%; equivalent to 0.10 yuan per share. In the third quarter of this year, the company achieved a sales revenue of 35.8 billion yuan, an increase of 28% year-on-year; the main business cost was 32.9 billion yuan, an increase of 34% year-on-year; the net profit attributable to the listed company was 230 million yuan, a year-on-year decrease of 79%; The income is 0.02 yuan, which basically achieves break-even after deducting non-recurring gains and losses.
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