Huaneng Hydropower (600025) 2018 Annual Report and 2019 First Quarterly Report Comments: Adding Units to Start Production and Overlaps Incoming Water, First Quarter Results Exceed Expectations

Huaneng Hydropower (600025) 2018 Annual Report and 2019 First Quarterly Report Comments: Adding Units to Start Production and Overlaps Incoming Water, First Quarter Results Exceed Expectations

Huaneng Hydropower (600025) 2018 Annual Report and 2019 First Quarterly Report Comments: Adding Units to Start Production and Overlaps Incoming Water, First Quarter Results Exceed Expectations

This report reads: Hydropower profit contributes to a good combination of investment income, and the performance in 2018 has improved significantly; benefiting from the commissioning of additional units and the abundant water supply, the first-quarter performance in 2019 is better than expected, and it is expected that progressive improvement in hydropower profit will be achieved gradually.

Maintain overweight.

Investment points: Investment advice: In view of the reduction in the increase rate, increase 19 and 20 years, and increase the EPS forecast for 21 years to 0.

21, 0.

25, 0.

28 yuan (19 and 20 years before adjustment EPS forecast is 0.

20, 0.

23 yuan), considering that the company is the second largest hydropower in the country, and the performance improvement space breakthrough, given the company 19 years of slightly higher than the industry average of 27 times PE, maintaining a target price of 5.

60 yuan to maintain overweight.

Event: The company released its 18th annual report and 19th quarter report.

18 year revenue 155.

200 million, an increase of 20 previously.

8%; net profit attributable to mother 58.

0 billion, an increase of 165 previously.

1%.

1Q1 revenue 44.

4 trillion, an increase of 49 in ten years.

7%, net profit attributable to mother 8.

0 million yuan, an increase of 137 in ten years.
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3%.

The first quarter results exceeded expectations.

Hydropower profit contributed to the good investment income of the merger, and the performance in 2018 improved significantly.

1) Both volume and price have risen, and the profitability of the main business has improved: Lanshang Generating Units have been put into operation in 18 years, with an additional 325 installed units.

50 kilowatts, generating 817.

2 billion kWh, an increase of 11 in ten years.

6%, increase the unit power to Shenzhen through UHV, the electricity price is higher than the existing unit, so the company’s hydropower price increased by 15 yuan / MWh in 18 years, volume and price rose to drive the company’s revenue growth by 20.

8%, gross profit increased by 18 billion per year; 2) Asset transfer, investment income increased: In 18 years, the company transferred 51% more, 100% Juba, Jinzhong Hydropower 23% equity, increasing investment income36.

7.6 billion.

The newly-increased unit combined was more abundant in incoming water, the performance in 19Q1 exceeded expectations, and the continued improvement of hydropower profits is expected.

In 19Q1, about 4 million kilowatts of cargo units were added before the year. At the same time, the water supply of the Lancang River was once abundant, and the power generation in 19Q1 increased.

28%, revenue increased 49 in ten years.

65%, while operating costs have increased only ten years.

3%, gross margin growth rate increased by 10 percentage points to 55%.