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华电国际(600027)点评:业绩符合预期火电成本改善助力盈利回升

Huadian International (600027) Review: Performance is in line with expectations, improved coal-power costs help profit rebound

申萬宏源研究 ·  May 10

Event: The company released its 2024 quarterly report. 1Q24 achieved operating income of 30.95 billion yuan, a year-on-year decrease of 3.2%; net profit to mother was 1.86 billion yuan, an increase of 64.2% year-on-year, in line with our expectations.

Thermal power generation fell slightly short of expectations, and the company's feed-in electricity volume declined slightly in the first quarter. 1Q24 completed 56.164 billion kilowatt-hours of power generation, a decrease of 0.19% over the same period last year, and completed a feed-in capacity of 52,477 billion kilowatt-hours, a year-on-year decrease of about 0.30%.

Among them, thermal power feed-in capacity was 51.48 billion kilowatt-hours, a year-on-year decrease of 0.7%, and hydropower feed-in capacity was 997 million kilowatt-hours, an increase of 24.5% over the previous year. We believe that the main reason for 1Q24's feed-in power supply decline is the rapid increase in the scale of new energy installations in key thermal power business areas (mainly located in Shandong and Hubei), combined with rapid restoration of incoming water in Hubei, and the increase in new energy and hydropower generation, which led to a year-on-year decline in the number of hours used by the company's thermal power plants.

Electricity prices have declined slightly, and cost improvements have significantly opened up profit margins. The average electricity price in 1Q24 was 0.509 yuan/kilowatt-hour, down 4.1% year on year. On the cost side, the average price of 5,500 kcal coal in Qinhuangdao reached 901.74 yuan/ton in 1Q24, down 20% from 1128.91 yuan/ton in 1Q23. The reduction in electricity prices is much lower than the reduction on the cost side. We judge that the main reasons include the annual long-term agreement electricity price signed at the beginning of the year to provide some price rigidity for feed-in tariffs, while the formal implementation of capacity electricity prices strengthens the stability of thermal power performance. Considering that the current domestic thermal coal supply and demand pattern continues to be relaxed in the region, and I am optimistic that the company's coal and electricity performance will continue to recover in the context of continuous improvement on the cost side. In terms of gas and electricity, since international gas prices continued to fall in 1Q24 against the backdrop of warm winters suppressing demand, leading to a decline in comprehensive domestic natural gas procurement costs, we judge that the pressure on gas and electricity generation costs has also weakened, and accelerated the recovery in overall thermal power performance.

The balance and liability structure continues to be optimized, and the decline in financial expenses helps to further release profits. As of 1Q24, the company's balance ratio was 60.4%, down 6.1 percentage points year on year and 2.2 percentage points lower than 62.6% at the end of 2023. 1Q24's capital expenditure was 1.60 billion yuan, a year-on-year decrease of 10.1%. With the LPR being lowered twice in a row in June of last year and February of this year, the financial expenses of the 1Q24 company also fell 8.5% year over year to 848 million yuan. Looking ahead to 2024, the company's capital expenditure will slow marginally, and the balance sheet repair trend is expected to continue. Combined financing costs will continue to decline, and I am optimistic that the company's profitability will improve further.

Profit forecast and rating: Based on the company's business situation in the first quarter, we maintained the company's net profit forecasts for 2024-2026 at 70.08 billion yuan, 75.15, and 8.843 billion yuan respectively (none of the above forecasts deducted interest on perpetual bonds of about 1 billion yuan), and the current stock price corresponding to PE is 10, 9, and 8 times, respectively. We are optimistic that the company's thermal power performance will continue to recover. After the superimposed capacity electricity prices are implemented, the stability of the company's performance will increase, and the “buy” rating will be maintained.

Risk warning: Coal prices continue to be high, and participation in the development of new energy sources falls short of expectations.

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