Huaneng International (600011): 1Q19 Results Exceed Expected Coal Price Downward, Releases Profit Elasticity
1Q19 results exceeded expectations. Huaneng International announced first-quarter 2019 results: operating income of 45.7 billion, an increase of 5.
Net profit attributable to mother 26.
USD 600 million, an annual growth of 114%, exceeding the expected market size.
Earnings growth mainly comes from lower coal price costs, non-electricity income growth and one-time income boost.
Excluding the one-time profit and loss effect, the company’s core profit doubled to 24.
500 million yuan.
The development trend in the first quarter is dazzling, and the behavior under fuel prices is preliminary and expected to be sustainable.
In the first quarter of 2019, Huaneng International’s net profit attributable to mothers continued to increase 114% to 26.
600 million, the price of coal prices may come down.
We estimate that the company’s unit fuel cost in the first quarter decreased or was significantly more significant.
At the highest level, at least the recent coal price is at 620?
The high level of 630 yuan / ton is hovering, but the conversion of coal mines to resume production, production capacity release and other positive factors accumulate and generate high inventory (coastal power plants in the past 4 months: distance + 18%).For the general direction.
We estimate that a 1% drop in coal prices will increase Huaneng’s profitability6.
5%, the highest sensitivity in the industry.
The decline in coal prices will significantly benefit the company.
Non-electricity income increased and one-time income increased 1Q19 profit performance.
Considering that the company’s electricity price charges remained stable in the first quarter, while the revenue side achieved a 5% increase, we expect that non-electricity business income such as heating may achieve an alternating growth rate of nearly 30% in the first quarter.
In terms of one-time gains and losses, the Shandong subsidiary received guarantee recovery payments, the reversal of Sino-Singapore Electric Power Fuel Oil inventory depreciation reserve, and the increase in the fair value of Sino-Singapore Electricity Fuel Hedging Contracts, which increased non-operating income1.
1 ppm reduces asset impairment losses by 0.
7 trillion and gains from changes in fair value rose by 0.
The positive impact of 200 million US dollars will increase the company’s performance.
Earnings Forecast Considering the company’s positive performance, we maintain our 2019/20 earnings forecast of RMB0.
39 and 0.
Estimated and recommended company 南宁桑拿 A shares correspond to 19/2017.
7 times P / E, H shares correspond to 10.
3 times P / E.
The retrospective company is one of the top targets of our thermal power sector, maintaining the A / H recommendation level and target price of RMB 8.
29 yuan and HK $ 6.
The stock implies 24% upside and corresponds to 19/20 21.
0 times P / E; H shares imply 22% upside and correspond to 19/20 12.
0 times P / E.
The company plans to hold a performance meeting at the beginning of the afternoon on the 26th. At that time, more details may be released, and it is recommended to pay attention.
Risk coal prices rose more than expected.
Electricity prices are down.