reports
- Jennifer Song
Morningstar | Datang’s 1Q Slightly Missed; Our FVE Remains Intact on...
After excluding one-off items from its first-quarter net profit of CNY 429.8 million, no-moat Datang’s performance was disappointing, with recurring net profit falling 28% year over year to CNY 380 million under PRC GAAP. Despite a 14% fall in the QHD 5,500 kcal benchmark coal price, Datang’s first-quarter performance implies a 3% rise in its unit cost. Besides a drop in operating leverage from the 5% fall in power sales volume that raises per unit cost, we think Datang has been relatively i...
- Jennifer Song
Datang’s 1Q Slightly Missed; Our FVE Remains Intact on Bearish Coal ...
After excluding one-off items from its first-quarter net profit of CNY 429.8 million, no-moat Datang’s performance was disappointing, with recurring net profit falling 28% year over year to CNY 380 million under PRC GAAP. Despite a 14% fall in the QHD 5,500 kcal benchmark coal price, Datang’s first-quarter performance implies a 3% rise in its unit cost. Besides a drop in operating leverage from the 5% fall in power sales volume that raises per unit cost, we think Datang has been relatively i...
- Jennifer Song
Morningstar | Datang’s 2018 Result Slightly Missed; Our FVE Remains ...
In line with industrywide deteriorating profitability, Datang’s full-year 2018 result missed our expectations, due to higher-than-expected fuel cost. Net profit fall 18% year over year to CNY 1.2 billion, with unit fuel cost rising 4% year over year. We think this, compared with only 1% growth in QHD 5,500kcal spot coal price, indicates that coal-fired IPPs have little flexibility to pass on the higher coal costs. Although Datang’s full-year result implies a net loss in the fourth quarter, w...
- Jennifer Song
Morningstar | Datang’s 2018 Result Slightly Missed; Our FVE Remains ...
In line with industrywide deteriorating profitability, Datang’s full-year 2018 result missed our expectations, due to higher-than-expected fuel cost. Net profit fall 18% year over year to CNY 1.2 billion, with unit fuel cost rising 4% year over year. We think this, compared with only 1% growth in QHD 5,500kcal spot coal price, indicates that coal-fired IPPs have little flexibility to pass on the higher coal costs. Although Datang’s full-year result implies a net loss in the fourth quarter, w...
- Jennifer Song
Datang’s 2018 Result Slightly Missed; Our FVE Remains Intact on Bear...
In line with industrywide deteriorating profitability, Datang’s full-year 2018 result missed our expectations, due to higher-than-expected fuel cost. Net profit fall 18% year over year to CNY 1.2 billion, with unit fuel cost rising 4% year over year. We think this, compared with only 1% growth in QHD 5,500kcal spot coal price, indicates that coal-fired IPPs have little flexibility to pass on the higher coal costs. Although Datang’s full-year result implies a net loss in the fourth quarter, w...
- Jennifer Song
Datang is Back on Track Following Its Divestment of Coal-Chemical Asse...
Despite a nationwide slowdown in power consumption growth, China Resources Power's operating performance in November lagged industry peers, with power sales volume falling 8.4% year over year versus 3.6% nationwide growth. This was largely driven by an 8.8% decline in the firm’s coal-fired power output, reflecting rising pressure coming from the cross-provincial power supply amid stricter environmental controls in coastal regions. This is in line with our expectations, and we expect west-to-ea...
- Jennifer Song
Morningstar | Falling Coal Price Will Be a Key Growth Driver for Datan...
Datang International Power Generation's decision to divest itself of its coal-chemical business is an important step toward restoring shareholder value. The divestment of nonperforming and capital-intensive coal-chemical assets allows the firm to improve its financial health and focus on its core competency in power generation. We expect Datang to grow and gain value as a leading independent power producer and believe its favorably located generation assets, with their higher efficiency standard...
- Jennifer Song
Cross-Provincial Power Supply Weighs on Coal-Fired IPPs; Falling Coal ...
Despite a nationwide slowdown in power consumption growth, China Resources Power's operating performance in November lagged industry peers, with power sales volume falling 8.4% year over year versus 3.6% nationwide growth. This was largely driven by an 8.8% decline in the firm’s coal-fired power output, reflecting rising pressure coming from the cross-provincial power supply amid stricter environmental controls in coastal regions. This is in line with our expectations, and we expect west-to-ea...
- Jennifer Song
Falling Coal Price Will Be a Key Growth Driver for Datang in 2019
Datang’s third-quarter performance missed our expectation, with net profit falling 52% year-over-year to CNY 398 million under PRC GAAP. Despite a strong 8% nationwide power consumption growth, Datang’s third-quarter power sales volume remained largely flat from a year ago. While this is disappointing, we think this probably suggests rising tariff pressure amid the expansion of power trading activities, and the company’s priority to maintain unit profitability at the expense of volume. Fue...
- Jennifer Song
Morningstar | Datang’s 3Q Missed on Lower Generation Volume; Cut FVE...
Datang’s third-quarter performance missed our expectation, with net profit falling 52% year-over-year to CNY 398 million under PRC GAAP. Despite a strong 8% nationwide power consumption growth, Datang’s third-quarter power sales volume remained largely flat from a year ago. While this is disappointing, we think this probably suggests rising tariff pressure amid the expansion of power trading activities, and the company’s priority to maintain unit profitability at the expense of volume. Fue...
- Jennifer Song
Morningstar | Datang’s 3Q Missed on Lower Generation Volume; Cut FVE...
Datang’s third-quarter performance missed our expectation, with net profit falling 52% year-over-year to CNY 398 million under PRC GAAP. Despite a strong 8% nationwide power consumption growth, Datang’s third-quarter power sales volume remained largely flat from a year ago. While this is disappointing, we think this probably suggests rising tariff pressure amid the expansion of power trading activities, and the company’s priority to maintain unit profitability at the expense of volume. Fue...
- Jennifer Song
Datang’s 3Q Missed on Lower Generation Volume; Cut FVE to HKD 2.50, ...
Datang’s third-quarter performance missed our expectation, with net profit falling 52% year-over-year to CNY 398 million under PRC GAAP. Despite a strong 8% nationwide power consumption growth, Datang’s third-quarter power sales volume remained largely flat from a year ago. While this is disappointing, we think this probably suggests rising tariff pressure amid the expansion of power trading activities, and the company’s priority to maintain unit profitability at the expense of volume. Fue...
- Jennifer Song
Morningstar | Strong Power Demand and Tariff Hike Drive Datang’s Dec...
In line with the industrywide profitability recovery, no-moat Datang’s decent first-half net profit of CNY 1.2 billion was no surprise, with 11% organic growth in power sales volume and 2.5% increase in average tariff the key drivers. Following the acquisition of 14 GW in generation assets from its parent, Datang’s total installed capacity rose 29.5% to 62 GW. However, these assets still made a net loss of CNY 335 million in the first half, compared with over 40% net profit growth of Datangâ...
- Jennifer Song
Morningstar | Strong Power Demand and Tariff Hike Drive Datang’s Dec...
In line with the industrywide profitability recovery, no-moat Datang’s decent first-half net profit of CNY 1.2 billion was no surprise, with 11% organic growth in power sales volume and 2.5% increase in average tariff the key drivers. Following the acquisition of 14 GW in generation assets from its parent, Datang’s total installed capacity rose 29.5% to 62 GW. However, these assets still made a net loss of CNY 335 million in the first half, compared with over 40% net profit growth of Datangâ...
- Jennifer Song
Strong Power Demand and Tariff Hike Drive Datang’s Decent First Half...
In line with the industrywide profitability recovery, no-moat Datang’s decent first-half net profit of CNY 1.2 billion was no surprise, with 11% organic growth in power sales volume and 2.5% increase in average tariff the key drivers. Following the acquisition of 14 GW in generation assets from its parent, Datang’s total installed capacity rose 29.5% to 62 GW. However, these assets still made a net loss of CNY 335 million in the first half, compared with over 40% net profit growth of Datangâ...
- Jennifer Song
Coal-fired IPPs See Both Opportunities and Challenges from Reforms; Sh...
Our recent visits with major coal and power companies revealed both opportunities and challenges for Chinese coal-fired independent power producers, or IPPs, amid the sector's reform. We expect coal-fired power plants to benefit from stable margins and healthy cash flows in long-run, with reforms likely to allow the IPPs to better match fuel costs with power pricing. However, the sector's long-standing and deep-seated structural problems, along with the complexities and difficulties in balancing...
- Jennifer Song
Higher Tariffs and Lower Coal Costs Drove Datang’s Decent 1Q; Shares...
In line with the industrywide turnaround after the loss-making fourth-quarter 2017, no-moat Datang’s first-quarter net profit came in at CNY 541 million under PRC GAAP. The company’s 6.8% sequential rise in first-quarter tariffs to CNY 383/MWh was impressive compared with Huaneng’s 2% decline. We think this suggests Datang is turning to a rationalized pricing policy with lower discounts offered on direct power sales, which may be reflected in its sequential 5% decline in power output. Howe...
- Jennifer Song
Datang's Turnaround in 2017 in Line; CNY 0.09 Dividend Surprises
No-moat Datang International Power Generation’s turnaround in 2017 net profit was expected, but the dividend of CNY 0.09 per share was a positive surprise, indicating confidence in the cash flow outlook. Fourth-quarter performance was weak, in line with the industry, and led to a 48% drop in full-year recurring profit to CNY 1.4 billion, as surging coal prices and lower average tariff coupled with an increasing share of lower-margin direct power sales squeezed profitability. We think Datang be...
- Jennifer Song
Surging Coal Prices Drove Nationwide Net Losses for Coal-Fired IPPs in...
Despite strong power demand, the 2017 profit warnings from China’s major independent power producers, or IPPs, suggest a nationwide net loss in the fourth quarter. Profit guidance from both Huaneng and Datang missed our expectations, despite in-line fourth-quarter operating statistics: over 20% year-over-year power generation volume growth and a 3%-6% rise in average tariff for coal-fired generation units, as well as a 2.6% fall in the benchmark Bohai-Rim Steam Coal Price Index, or BSPI. We th...
- Jennifer Song
Carbon Trading Will Help to Phase out Inefficient Coal-Fired Generatio...
China’s launch of carbon trading in the power sector due to rising emission costs will accelerate the sector’s supply side reform, helping to phase out low-efficient coal-fired generation capacity, . We think market leaders, including Huaneng, Datang and China Resources Power, with high-efficiencies and low emissions will stand to benefit from the improving supply demand balance over a longer term. By the first half of 2017, more than 80% of Huaneng, Datang and China Resources Powers’ gen...
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