Strong Power Demand and Tariff Hike Boosted Huaneng’s First Half; Shares Are Fairly Valued
No-moat Huaneng’s strong first-half 2018 result, with net profit rising 6 times year over year to CNY 1.7 billion, was within expectations, with 12% growth in power sales volume and a 2.7% increase in average selling tariff the key boosts. While Huaneng’s unit coal cost was up by 6% in first-half 2018, the recent decline in the QHD 5,500 Kcal spot coal price to around CNY 600/ton from over CNY 700/ton in early June reaffirms our bearish coal price outlook, and we expect coal price weakness to be...Huaneng Power International is engaged in investment, construction, operation and management of power plants. Through its subsidiaries, Co. is also engaged in power generation; development of wind power project; production and sale of electricity; heat supply; construction and operation of power plants and related construction projects; wholesale of coal; construction, operation and management of hydropower, cogeneration power and related projects; provision of utility services; and consultancy in waste recycling industrial waste management and recycling. As of Dec 31 2010, Co. had controlling generation capacity and equity-based generation capacity of 50,935 MW and 45,340 MW, respectively.
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