① Due to the year-on-year increase in power generation in the hydropower business, Hunan Development's net profit in Q1 this year increased more than 4 times. ② In the same period, many companies involved in the hydropower business announced mixed increases and decreases in power generation, and this year's Q1 results may be uneven.
Finance Association, April 10 (Reporter Huang Lu) Hydropower is a good business, but depending on the weather, power generation fluctuates greatly every year. Tonight's Hunan Development (000722.SZ) announcement shows that due to the year-on-year increase in power generation in the hydropower business, there was a sharp increase in Q1 performance this year.
According to the announcement, the company expects to achieve net profit of 23 million yuan to 28 million yuan in the first quarter of this year, an increase of 499.50% to 629.83% over the previous year. The reason is that during the reporting period there was an abundance of incoming water from the upstream hydropower plants belonging to the company, and the hydropower business sector generated a significant increase in power generation compared to the same period last year.
The 2023 annual report released by Hunan Development a week ago was a different story. Last year, the company achieved revenue of 292 million yuan, a year-on-year decrease of 30.48%; net profit of 494.666 million yuan, a year-on-year decrease of 28.46%. Mainly affected by extreme weather and other factors, the company's holding and shareholding power plant power generation and gravel sales all declined compared to the previous period (of which, net profit for the first quarter of 2023 was about 3.84 million yuan, down 90.47% year on year).
The company currently operates and manages 3 hydropower stations in Hunan: Zhuzhou Avionics, Mangtang Creek, and Bird's Nest. According to the company's water system statistics, in 2023, the total inbound flow of Zhuzhou Avionics decreased by 41.17% year on year, and the total inbound flow of Bird's Nest Company decreased by 65% year on year. This also led to a year-on-year decrease of 3.21% and 45.53% of the company's two major hydropower plants, respectively.
According to information, hydropower is the main source of gross margin for hydropower companies. Normally, the higher the flow rate, the higher the water head, the longer the duration, the greater the amount of hydropower generation over a period of time, and the ability to regulate hydropower increases its comprehensive income by affecting the time distribution of hydropower generation. Flow, water head, and regulation capacity are all severely limited by the natural conditions of the watershed (such as precipitation, topography, hydrology, etc.), so the resource endowment of the watershed plays a decisive role in the quality of hydropower assets.
In addition to the sharp advance increase in development in Hunan, due to uneven increases and decreases in power generation over the same period, many listed companies that are mainly involved in hydropower have had excellent results or uneven results in Q1 this year. According to incomplete statistics, several companies involved in the hydropower business have released Q1 power generation data.
On the evening of the same day, Hubei Energy (000883.SZ) announced that the company completed a total of 10.833 billion kilowatt-hours of electricity this year, an increase of 41.87% over the previous year (of which hydropower generation capacity increased 176.10% year on year); in March, the company completed 3.309 billion kilowatt-hours of power generation, an increase of 25.67% year on year (of which hydropower generation increased 114.49% year on year).
Although Hubei Energy did not release this year's Q1 performance forecast, according to the company's 2023 performance report, it achieved net profit of 1,811 billion yuan last year, an increase of 55.80% over the previous year. One reason is that the watershed where the company's main hydropower plants are located had better water in that year, hydropower generation increased, and the gross profit of the domestic hydropower business increased year-on-year.
According to the April 8 announcement of Changjiang Electric Power (600900.SH), according to the company's preliminary statistics, in the first quarter of 2024, the total amount of incoming water from the Wudongde Reservoir in the upper reaches of the Yangtze River was about 14.849 billion cubic meters, 7.71% less than the same period last year; the total amount of incoming water from the Three Gorges Reservoir was about 49.767 billion cubic meters, 4.14% lower than the same period last year. In the first quarter of 2024, the total power generation capacity of the company's six cascade power plants was about 52,747 billion kilowatt-hours, a decrease of 5.13% over the same period last year.
According to the April 9 announcement of Huaneng Hydropower (600025.SH), the company completed a power generation capacity of 16.226 billion kilowatt-hours in the first quarter of this year, a year-on-year decrease of 7.17%, and feed-in electricity capacity of 16.058 billion kilowatt-hours, a decrease of 7.25% over the previous year.