Everbright Securities: First investment in Huadian International (01071) AH shares “increased” the company's performance, and there is still room for improvement
The Zhitong Finance App learned that Everbright Securities released a research report stating that the 26/27/28 EPS (A share) forecast for Huadian International (01071; 600027.SH) will be 0.43, 0.48, and 0.53 yuan; the PE corresponding to the current stock price (A share) is 11/10/9 times; EPS (H shares) is predicted to be 0.38, 0.43, and 0.48 yuan, corresponding to the current stock price (H shares), the PE corresponding to the current stock price (H shares) is 9/8/7 times, respectively. Considering the clear growth of the company's installed capacity in the future and the expected injection of units within the group, there is still room for improvement in the company's performance. Covered for the first time, Huadian International (A&H) was given an “gain” rating.
The main views of Everbright Securities are as follows:
incident
The company released its 2026 interim report. In the first half of 2026, the company achieved revenue of 54.264 billion yuan, -9.49% year-on-year; net profit to mother was 3.105 billion yuan, -20.47% year-on-year. In the Q2 quarter, the company achieved revenue of 23.791 billion yuan, -9.56% year-on-year; net profit to mother was 1,316 billion yuan, or -31.37% year-on-year.
Electricity generation is under pressure, and electricity prices are rising year on year
Generation capacity completed in the first half of the year was 107.785 billion kilowatt-hours, -10.65%; the main reasons for the decline: 1) due to good incoming water conditions in regions rich in hydropower resources, 2) the combined effects of increased new energy installations in the market and new installations of coal power crowding out the power generation space of the company's stock units, and 3) low summer temperatures in the region where the company's units are located led to a decrease in peak load demand. However, electricity prices showed impressive performance. In the first half of the year, the average feed-in electricity price was about RMB 517.78 yuan/megawatt-hour, +0.19%; the main reasons: 1) coal capacity subsidies in various regions were raised in 26, 2) the main power plants were concentrated in northern regions such as Shandong, and regional electricity prices were relatively resistant to falling during the downward cycle of electricity prices in the national Changxie. The company's revenue declined as volume and price effects were hedged.
The decline in the price of imported standard coal combined with the decline in non-coal costs increased the overall gross profit margin, and the decline in investment income suppressed the company's profit level
The company's standard coal intake price in the first half of the year was 833.75 yuan/ton, -2%; the overall fuel cost was -12.49%, and the operating cost was -10.48%; the corresponding company's gross margin increased by 0.98 pct year on year to 11.70%. The main reason for the sharp year-on-year decline in net profit to the mother in the first half of the year was the drag on investment income; in the first half of the year, the company achieved investment income of 1,225 billion yuan, a year-on-year decrease of 1,216 billion yuan, or 49%. The main reasons are: 1) Huadian Xinneng, which participated in shares, was affected by the year-on-year decline in wind power/photovoltaic utilization hours, the pressure on feed-in electricity prices, and the decline in nuclear power investment income. The net profit ratio of the combined company decreased by 4.3 pct to 26.78% from 31.03%. The investment income contributed by the equity method was only 946 million yuan (a year-on-year decrease of 914 million yuan); 2) The profit assets of participating in coal mines also shrank due to falling coal prices.
Increased installed capacity guarantees long-term growth, focusing on shareholder returns and implementing mid-term dividends
As of the first half of '26, the total number of units approved by the company and under construction was 12.918 million kilowatts (402/8898 million kilowatts of coal and electricity, respectively). Subsequent injections of the Group's traditional energy assets also increased. In addition, the company focuses on shareholder returns and plans to implement a mid-term cash dividend of 0.09 yuan/share (tax included) in 2026.
Risk warning: the risk of tightening environmental policies, the risk of replacing new energy sources, and the risk of electricity market-based reform.