Huadian International (600027): Fuel costs, financial expenses supplementation led to third-quarter profit growth in line with expectations

Huadian International (600027): Fuel costs, financial expenses supplementation led to third-quarter profit growth in line with expectations

The 3Q19 results were in line with market expectations. Huadian International announced its 3Q19 results: revenue of 23.3 billion US dollars, a long-term growth of 0.

8%; net profit attributable to mother 8.

5 ‰, a year-on-year increase of 48%, in line with market expectations.

Fuel costs have fallen and financial cost savings have contributed to third-quarter earnings growth.

In the third quarter of 2019, the net profit attributable to mothers was increased by 48%, mainly benefiting from (1) the decrease in unit fuel cost of coal machinery3.

7% (0% qoq.

5%); (2) the expansion of the scale of interest-bearing debt (down 4% at the end of the third quarter) and the decrease in financing costs caused by the decline in financing costs by 7%.

Leverage is reduced and the balance sheet is more robust.

We estimate that the company’s asset-liability ratio reached 68% at the end of the third quarter, and each year, it was down by 3 sequentially.

6, 1.

2 units, the financial situation has become increasingly stable.

The development trend is optimistic about the decline in coal prices in the fourth quarter and continues to contribute to the rebound in profit. Since October, the spot thermal coal price has continued to decline slightly, and is currently close to the 570 yuan / ton level. We believe that the continuous decline in fuel costs will continue to promote profit recovery.
In addition, through the opening of the Haoji Railway, which transports coal to Central China, we believe that the company ‘s Hubei (13% installed capacity at the end of the first half of the year), Anhui (9%), and Henan (5%) units, in the long run,Benefiting from increased transportation capacity, regional coal prices have fallen.

Pay attention to changes in power in key installation areas.

In terms of power, we will continue to pay attention to the impact of foreign power entering Shandong on the company’s Shandong power plant, and we are optimistic that Hubei and other places will benefit from the growth in local power demand and have better utilization hours.

Earnings Forecasts and Estimates Considering that the third quarter earnings are in line with expectations, we temporarily leave the company’青岛夜网s earnings forecasts unchanged.

The current A-share contradiction corresponds to 9/2019/2020.

8 times / 8.

8 times price-earnings ratio, 0.


6 times P / B and 3.

9% / 4.

4% dividend yield.

The current H shares can continue to correspond to July 2019/2020.

3x / 6.

5 times price-earnings ratio, 0.


5x P / B and 5.

3% / 5.

9% dividend yield.

We maintain an Outperform rating on the company’s A shares and a 5.

Target price of 30 yuan, corresponding to 14 in 2019/2020.


7 times price-earnings ratio, 1.


9 times P / B and 2.

7% / 3.

0% index rate, 44 more sustainable than recent.8% upside.

H shares maintain outperform industry rating and 4.

59 reached the target price, corresponding to November 2019/2020.


8 times price-earnings ratio, 0.


8 times 北京夜网 P / B and 3.

5% / 3.

The 9% yield is 51% more sustainable than in the recent past.

5% upside.

Risk coal prices fell less than expected; electricity demand fell short of expectations.