Key points:

occurrences

Huaneng International released its report for the third quarter of 2024. From January to September 2024, the company achieved operating income of 184.396 billion yuan, a year-on-year decrease of 3.62%; net profit to mother of 10.413 billion yuan, a year-on-year decrease of 17.12%; net profit after deducting non-return to mother of 10.041 billion yuan, an increase of 6.87% year-on-year. With 2024Q3, the company achieved operating income of 65.59 billion yuan, a year-on-year increase of 0.46%; net profit to mother was 2.959 billion yuan, a year-on-year decrease of 52.69%; net profit after deducting non-return to mother was 2.861 billion yuan, a year-on-year decrease of 25.18%. The decline in the company's Q3 performance was mainly due to depreciation of 1.193 billion yuan in accrued assets (impairment loss of 0.727 billion yuan for Jining power plant and 0.409 billion yuan for Nong'an biomass power plant impairment loss).

Q3 Peak summer promotes a slight increase in thermal power generation, and a steady reduction in the coal price center promotes cost optimization

From January to September 2024, the company's coal power units completed feed-in electricity of 278.104 billion kilowatt-hours, a year-on-year decrease of 2.09%; gas units completed feed-in electricity of 21.137 billion kilowatt-hours, an increase of 0.82% over the previous year. In Q3 alone, the company's coal power units completed feed-in electricity of 107.704 billion kilowatt-hours, a year-on-year decrease of 0.29%; gas units completed feed-in electricity of 8.803 billion kilowatt-hours, an increase of 8.69% over the previous year. During the peak summer season, the country's electricity demand grew rapidly, and thermal power output increased significantly. From January to September 2024, the electricity consumption of the whole society reached 7409.4 billion kilowatt-hours, with a year-on-year increase of 7.9%. Among them, in July-September, the electricity consumption of the whole society increased 5.69%, 8.87%, and 8.5%, respectively. In September, the country's thermal power generation increased 8.9% year on year, and the growth rate increased 5.2 pcts month-on-month. During this period, the company's thermal power plants played a supporting role. Q3 thermal power generation increased slightly year-on-year, contributing to the narrowing of the company's cumulative thermal power decline in January-September. From January to September 2024, the average price of thermal coal (5,500 kcal) in Qinhuangdao was about 875 yuan/ton, down 11.3% from the same period last year. Among them, the average price in July-September was about 857, 847, and 858 yuan/ton. Apart from a slight year-on-year increase in August, they all achieved a certain year-on-year decline.

Installed equipment continues to transition to green and low carbon, and the high increase in new energy sources is driving an overall positive increase in electricity capacity

The company continues to promote the green and low-carbon transformation of the installed structure. From January to September 2024, the company achieved an additional installed capacity of 5.2786 million kilowatts of controllable power generation, including 1.4675 million kilowatts of wind power and 3.7531 million kilowatts of photovoltaic power generation. With the further increase in installed capacity, the company's new energy generation capacity continued to grow rapidly. From January to September 2024, the company completed 2.683 million kilowatt-hours of wind power, an increase of 16.12% over the previous year; completed a feed-in capacity of 13.884 billion kilowatt-hours for photovoltaic power generation, an increase of 72.92% over the previous year. In Q3 alone, Fengguang's feed-in electricity volume increased by 25.65% and 71.06%, respectively. The high growth rate of new energy power led the company to achieve positive overall electricity growth. From January to September 2024, the company's operating power plants in China completed a total of 341.24 billion kilowatt-hours of feed-in electricity, an increase of 1.14% over the previous year. In Q3 alone, the company completed 130.562 billion kilowatt-hours of feed-in electricity, an increase of 3.43% over the previous year.

Profit forecasts and investment advice

The company is a leading power company in the country. As thermal power profitability is restored and electricity reform continues to be deepened, the value of the company's thermal power assets is expected to be revalued; the company's new energy business is developing rapidly, which is expected to drive the company's long-term performance growth. Considering changes in coal prices and electricity prices since the second half of the year, we adjusted the company's profit forecast. The company's net profit for 2024/2025/2026 is estimated to be 114.00/133.02/149.51 (previous value was 127.98/150.15/177.37) billion yuan, a year-on-year growth rate of 34.98%/16.69%/12.39% (previous value was 51.54%/17.32%/18.13%). As of the close of trading on November 11, the company's current stock price corresponding to PE was 10.12/8.67/7.72 times, respectively. Maintain the company's “gain” rating.

Risk warning

The risk of coal price fluctuations; the risk that electricity prices in the market will fall beyond expectations; the risk that the installation progress of new energy sources falls short of expectations.