The semi-annual report of the five major listed power generation companies: fuel costs drop and profits increase simultaneously

Huaneng Power International, Guodian Power, Datang Power, Huadian International, and China Power have recently released performance reports for the first half of this year.

Low coal prices lead to a big increase in profits

In the first half of the year, Huaneng International continued to be the industry leader with a net profit of 5.

The performance of a number of major listed companies of power generation central enterprises in the first half of the year exceeded institutional expectations, and their stock prices rose sharply following their performance disclosures.

Some industry analysts pointed out that affected by the epidemic, coal supply and demand situation and price trends changed in the first half of the year: coal mines resumed work and production at a normal pace, but downstream demand was significantly reduced due to the early impact of the epidemic; when subsequent demand began to pick up, downstream demand was higher.

The downturn in coal prices did not begin after the epidemic this spring.

Reappearance of "both volume and price drop, profit growth"

Electricity demand is the "barometer" of economic development, which directly reflects the weakening of terminal demand in the first half of the year.

Correspondingly, the revenue of the five listed companies in the first half of the year also declined compared with the same period.

　　It is worth noting that in the first half of 2015, the operating performance of the five major listed power generation companies also showed a situation of "both volume and price reduction and substantial increase in profits", but the reasons for this phenomenon were not the same.
At that time, the coal industry had not yet completed the work of resolving excess capacity, and the supply and demand of coal for electricity was extremely imbalanced.
Although coal power was also affected by the policy of reducing electricity prices, the price of electricity sales was reduced, but the extremely low level of coal prices greatly reduced the cost of power generation.
Once ushered in a short "carnival".
But then, due to the rapid progress of coal capacity reduction work and the excessive construction of coal power plants, the operating efficiency of coal power plants has deteriorated sharply, and it has only slightly improved in the past two years.
The industry urges the need to continue to be vigilant against the risks of overcapacity.

　　Clean transformation is imperative

　　Among the above-mentioned five companies, only Guodian Power's net profit in the first half of the year decreased year-on-year, mainly due to the impact of the bankruptcy and liquidation of its subsidiaries.

　　In 2019, Ningxia Solar Energy and Xuanwei, a subsidiary of Guodian Power, declared bankruptcy and liquidation due to deteriorating operating conditions and long-term debt insolvency.
Guodian Power accrued a total of 1.
57 billion yuan in asset impairment losses and 2.
86 billion yuan in credit impairment losses throughout the year.
Both amounts exceeded expectations, which greatly affected the company's performance.

　　The CICC research report shows that although the above two assets are no longer included in the scope of this year’s consolidation, Xuanwei’s long-term investment losses and reversal of previous years’ losses still have an adverse impact of approximately 1.
827 billion yuan on Guodian Power, resulting in the deduction of non-recurring losses.
After the sexual gains and losses, Guodian Power lost 1.
761 billion yuan in the first half of the year.

　　In 2019, in addition to Guodian Power, Huaneng Power International, Datang Power and other factors also accrued asset impairment losses on factors such as bankruptcy, liquidation, shutdown, and scrapping.
In addition, Datang Power's short-term performance was hit hard by the disposal of coal chemical-related assets in 2017 and 2018.
However, in recent years, as the business focus has shifted to the main power generation business, performance has improved significantly.

　　While coal power is still facing the risk of surplus, the contribution rate of clean energy to the operating performance of power generation companies has been rising in recent years.
Not only that, because wind power and photovoltaic power generation are less affected by the epidemic, companies with clean energy as the main source of profit benefit from this.
It is understood that in the first half of the year, hydropower and thermal power generation decreased by 7.
3% and 1.
6% year-on-year, respectively, while wind power and photovoltaic power generation increased by 10.
9% and 20.
0%.

　　China Power’s semi-annual report pointed out that while the company’s thermal power sales decreased by 7.
37% year-on-year, wind power and photovoltaic power generation increased by 27.
73% and 39.
08% year-on-year, respectively.
China Power's clean energy power generation installed capacity accounted for more than 30%.
Clean energy has become more and more important to the overall profit contribution.
This also makes it the company with the highest "net profit/revenue" ratio among the five companies, with only 130.
56 revenue in the first half of the year.
In the case of RMB 1.
173 billion, net profit attributable to shareholders was recorded at RMB 1.
173 billion.
(Reporter Lu Bin)

Transfer from: China Energy News

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