Huadian International (600027): Second-quarter results surpassed expectations by single fuel, and the installed layout advantage is expected to continue to drive growth
The second quarter results exceeded our expectations of Huadian International’s 1H19 results (according to Chinese accounting standards): revenue of 43.7 billion US dollars, +5 per year.
2%; net profit attributable to shareholders of listed companies16.
500 million, +67 in ten years.
4%, corresponding to a basic income of 0.
145 yuan, ten years + 45%.
This surpassed our profit forecast of US $ 1.4 billion in the first half of the year, which is about 18%, mainly benefiting from the excellent performance of the implementation of the breakdown of operating indicators in the second quarter, and the return of the net profit of the mother increased by 193% to 8.
Development Trend 2Q19 performance exceeded expectations; the implementation of operational indicators were dazzling.
Huadian International’s net profit in the second quarter increased significantly by 193% year-on-year, mainly due to 1) after the April yield adjustment, the company’s electricity price in the second quarter changed to +2.
5% (1Q: +0.
6%); 2) Electricity sales +3 each time.
0% (1Q: +8.
5%), previous peers (Huaeng and China Resources were separated by -12% /-11% in 2 quarters); 3) Unit fuel cost decreased; 4) Financial expenses decreased 4.
4% (1Q: +0.
5%) and 5) inflation rate, the proportion of minority shareholders’ equity decreased by 18/11 ratios to 13% / 17% each year (1Q: 24% / 30%).
The second half of the year continued to benefit from the decline in coal prices, and at the same time the installed layout advantage brought peers’ peer performance.
Spot coal prices are not busy in peak seasons, and average prices in July and August fell by 9% / 5%, respectively.
After the fall, through the reduction in coal consumption, we expect that the decline in thermal coal prices will gradually increase and drive Huadian’s earnings growth.
In 杭州桑拿 addition, the company’s coal-fired unit utilization hours in the first half of the year (multiple reductions of 0.
3%) long-distance counterparts, mainly benefiting from the company’s strong demand for power in Hubei and Anhui, the installed capacity of Anhui Province, both provinces installed capacity accounted for about 10% of the company’s total installed capacity.
We expect the company’s installed layout advantages to continue.
Earnings forecasts and estimates We maintain our earnings forecasts unchanged.
Huadian International’s current A shares are expected to correspond to October 2019/20.
8 times / 9.
7 times price-earnings ratio; H-share merger corresponds to 7 in 2019/20.
6 times / 6.
8 times price-earnings ratio.
We maintain our Outperform rating on the A shares and 5.
Target price of 30 yuan, 四川耍耍网 corresponding to 14.
2x 2019 P / E ratio and 12.
7 times the 2020 price-earnings ratio, 31% more upside than before
H shares maintain outperform industry rating and 4.
59 reached the target price, corresponding to 11.
0 times 2019 P / E ratio and 9.
8 times 2020 price-earnings ratio, 44% upside compared to the current period.
Risky electricity demand was lower than expected and electricity prices were lowered.