华能四川的泸定硬梁包水电站（装机容量111.6 万千瓦）预计于2024 年年底启动首台机组，并于2025 年6 月完成全部投产。截至2024 年6 月底，公司总装机容量2920.32 万千瓦，在云南省装机规模第一。目前公司正在澜沧江流域规划建设水风光一体化清洁能源基地。Key points of investment:
Huaneng's core hydropower platform owns the right to develop the main stream of the Lancang River.
The company is a large-scale watershed hydropower enterprise controlled and managed by China Huaneng Group Co., Ltd., which is uniformly responsible for the development of water energy and new energy resources in the main stream of the Lancang River, with the Lancang River basin as the main body to maximize the allocation of watershed resources. In September 2023, the company completed 100% equity injection of Huaneng Sichuan Company.
Huaneng Sichuan's Luding Jiaoliangbao Hydropower Station (installed capacity 1.116 million kilowatts) is expected to start the first unit at the end of 2024 and complete full commissioning in June 2025. By the end of June 2024, the company had a total installed capacity of 29.2032 million kilowatts, the largest installed capacity in Yunnan Province. Currently, the company is planning to build a clean energy base with integrated water and landscape in the Lancang River basin.
New energy installations have boosted electricity capacity, and debt structure optimization has significantly reduced costs.
2024H1, the unit owned by the company completed power generation capacity of 46.695 billion kilowatt-hours, an increase of 12.15% over the previous year, and the feed-in electricity capacity was 46.272 billion kilowatt-hours, an increase of 12.36% over the previous year. In the first half of the year, incoming water from the Lancang River basin was about 30% higher than the previous year. In addition, the company's new energy installed capacity increased dramatically year on year, and new energy generation capacity increased dramatically year on year. In particular, revenue from the photovoltaic power generation business increased by 321.62% year-on-year.
In recent years, the company has used low-interest capital to replace existing debts ahead of schedule, further optimizing the financing structure.
In 2023, the company's financing costs were reduced by 60 basis points year over year, and annual interest expenses were reduced by 0.486 billion yuan year on year, a decrease of 14.9%. By the third quarter of 2024, interest charges continued to decline, decreasing by 0.006 billion yuan in a single quarter. As the company has sufficient cash flow, interest expenses are expected to be further reduced, thereby increasing the overall profit level.
Electricity prices in Yunnan Province continue to grow. The company's first-mover advantage helps green power develop electricity prices. In terms of electricity prices, market-based electricity prices in Yunnan Province continued to rise in 2023. The average monthly market-based electricity price for the whole year was about 0.252 yuan/kilowatt-hour, an increase of about 11.4% compared to 2022. Entering the beginning of 2024, consecutive winter and spring droughts continued in the Yunnan region, and electricity supply and demand were still tight. In January-January, the average electricity price for market-based transactions in the province rose 1.43 cents/kilowatt-hour year on year to 0.3152 yuan/kilowatt-hour, an increase of 4.8%. Starting in 2021, the company is committed to the development strategy of a “integrated water and landscape” base. In 2024, the company plans to renew and start a total of 84 new energy projects. It plans to invest 13.991 billion yuan and start 3.09 million kilowatts during the year. The projects are mainly distributed in various regions of Dali, Banna, Pu'er, Lincang, Nujiang, Baoshan, Kunming and Sichuan provinces to achieve the goal of adding 10 million kilowatts during the “14th Five-Year Plan” period.
Profit forecasting and investment advice
We forecast that the company's revenue for 24-26 will be 245.50, 272.03 billion yuan, and 28.508 billion yuan, respectively; net profit to mother will be 86.96, 96.86, and 10.139 billion yuan, respectively; EPS will be 0.48/0.54/0.56 yuan, respectively. The corresponding closing price of PE on December 6 will be 19.5/17.5/16.7 times, respectively. The first coverage gives a “hold” rating.
Risk warning
Incoming water from the reservoir basin has dried up; electricity sales have been blocked due to falling demand; the volatility of the electricity price market has increased; and the progress of installed equipment construction falls short of expectations.
