Yamato: Huaneng International Power Co., Ltd. (00902)'s core net profit fell 84% last quarter, and coal and electricity profits further weakened, and the rating “outperformed the market”

The Zhitong Finance App learned that Yamato released a research report saying that Huaneng International Power's net profit for the third quarter fell 77.8% year on year to 1.24 billion yuan, and regular net profit fell 84.4% year on year to 816 million yuan; net profit for the first three quarters fell 47.3% year on year to 7.82 billion yuan, far lower than the original low forecast. The bank previously warned investors to pay attention to downside risks and currently maintains a “outperforming market” rating.

The bank pointed out that the company's coal and electricity profits deteriorated further. The profit before tax for the third quarter decreased by about 5.03 billion yuan year on year, compared with the group's profit before tax, which decreased by about 5.69 billion yuan year on year, reflecting the main drag on the coal power business. Revenue for the period fell only 3.3% year on year to 58.94 billion yuan, but operating costs increased 7.9%, and gross margin narrowed by about 9.2 percentage points to about 11.4%. The company attributed the decline in profits in the first three quarters to a decline in domestic power generation and settlement electricity prices, as well as an increase in fuel costs per unit of electricity sales.

The bank said it had earlier reminded investors to pay attention to downside risks. Currently, it remains cautious about the profit recovery prospects of Huaneng International Power Co., Ltd., believing that the performance further confirms its concerns about coal and electricity profit margins and shareholder allocations. However, the recovery in the wind power business is encouraging, and it will pay attention to management's outlook on electricity prices and fuel costs at the factory.