Huaneng International (600011) first quarter report of 2019 comment: fuel cost reduction performance highlights flexibility

Matters: In the first quarter of 2019, the company achieved operating income of 456.

52 ppm, an increase of 5 per year.

15%; operating costs 371.

93 trillion, a year down 0.

58%.

Gross profit margin reached 18.

3% in the first quarter of last year.

8 points.

; The total profit is 46.

470,000 yuan, an increase of 10 over the same period last year.

18%; Realize net profit attributable to parent company.

56 million, an increase of 114 per year.

27%; budget benefit is 0.

16 yuan, an increase of 0 over the same period last year.

08 yuan / share.

Comment: Lower fuel costs and significantly improved performance.

The company realized net profit attributable to mother 26.

56 million, an increase of 114 per year.

27%.

Gross profit margin reached 18.

3% in the first quarter of last year.

8 points.

The increase in gross profit margin was mainly due to the reduction in fuel costs.

In the first quarter of 2019, the spot price of Shanxi-made thermal coal (Q5500) in Qinhuangdao fell by 100 yuan / ton, the monthly long-term price of Shenhua fell by 88 yuan / ton, and the annual long-term price of CCTD (Q5500) fell by 13 yuan / ton.

According to the spot, the monthly long-term association and the annual long-term association each account for 30%, 35%, and 35% respectively. The company’s standard coal price (excluding tax) has gradually decreased by about 72 yuan / ton.

In the first quarter of 2019, the national thermal power generation volume increased by 2% per quarter, which was a decrease from the first quarter of last year4.

9 points.

.

Downstream power plants maintain high inventories. Through the resumption of work at Yulin Coal Mine, the supply and demand of thermal coal will be loosened. It is expected that coal prices will continue to decline moderately.

The performance elasticity brought by the drop in coal prices is much higher than the decrease in performance caused by weak demand.

We estimate that the unit price of standard coal (excluding tax) dropped by 10 yuan / ton, and the company’s net profit attributable to mothers in 2019 increased by 43% compared to 2018.

The heating income increased significantly, contributing to the increase in operating income.

In the first quarter of 2019, the company achieved operating income of 456.

52 ppm, an increase of 22 over the same period last year.

3.6 billion, a five-year growth of 5.

15%.

The company completed 1038 electricity generation.

3.9 billion kWh, a decrease of 0 per year.45%; completed sales of 982.

5.5 billion kWh, a decrease of 0 per year.

06%; the average on-grid electricity price is 421.

87 yuan / MWh, a year of decline of 0.

40%; growth rate is 1 pct lower than last year.

.

Taken into account, electricity revenue was basically the same as last year, and heating revenue contributed to the increase in operating income.

We expect that in the first quarter, the company’s heating revenue will increase by 20% -30% each year.

The growth rate of power generation in eastern provinces has led to a decline in the company’s power generation growth rate.

In the first quarter of 2019, the growth rate of power consumption in 15 provinces and autonomous regions was lower than the growth rate of power consumption in the whole country. 68% of the company’s thermal power installed capacity was located in such regions.

In 2019Q1, the growth rate of hydropower generation across the country was 12%, an increase of 9 from the same period last year.

Affected by this, Guangdong, Zhejiang, Jiangsu and Shanghai, where the outsourcing of hydropower accounts for a relatively high proportion, have a power generation growth rate of -7.

5%, 1.

6%, 2.

9%, -1.

9%, far exceeding the national power generation growth rate4.

2%.

It is expected that the expected growth rate of hydropower generation will be difficult to maintain a high growth rate, and the squeeze on power generation in Guangdong, Zhejiang, Jiangsu, Shanghai and other provinces will gradually decrease, and the company’s power generation growth rate will be closer to the national level.

The expected growth rate is reduced to increase the company’s performance, and electricity prices are likely to remain stable.

At the two sessions, the growth of industries such as manufacturing was reduced from 16% to 13%.

We have estimated that when the thermal power / coal industry yield is reduced 南宁桑拿 from 16% to 13%, the company’s 2019 performance will increase by 20%.

At the initial two sessions, the average industrial and commercial electricity price was reduced by another 10%, and the cost reduction space is expected to be 71.6 billion.

The growth rate was lowered from 16% to 13%, and the power grid’s profit margin reached 400 trillion; major water conservancy funds ended on December 31, 2019, and 0 was cancelled nationwide.

The national major water conservancy project construction fund of 43 cents / kWh can reduce fees by 31.2 billion.

Basically, the price reduction targets set by the two sessions can be achieved, and the benchmark price of thermal power is likely to remain stable.

Earnings forecasts, estimates and investment ratings.

According to the latest operating data and the situation of fixed growth, we adjusted our profit forecast and estimated that the company’s net profit attributable to the mother for 2019-2021 will be 64.

100 million, 98.

300 million, 132.

8 trillion (the original forecast was 61.

700 million, 87.

100 million), an annual increase of 345.

8%, 53.

2%, 35.

1%, the corresponding EPS is 0.

41, 0.

63, 0.

85 yuan / share (the original forecast was 0.

40, 0.

56 yuan / share), corresponding to PE of 16.3, 10.

7, 7.

9 times, corresponding to PB 1.

2, 1.

1.

1 times.

The reference SW thermal power sector comparable company’s average PB in 2018 was 1.

Doubled, given to leading companies in January 2018.

5x PB, adjust target price to 8.

42 yuan, maintaining the “strong push” level.

Risk warning: coal price rises; electricity price cuts; utilization hours are less than expected.