华电国际(600027) - 2020 Q2 - 季度财报

Definitions This section defines key technical terms used in the report, providing a foundation for understanding its content - This section defines key technical terms used in the report, including power supply coal consumption, utilization hours, power generation, controlling installed capacity, and plant power consumption rate, providing a basis for understanding the report's content[7][404] Company Profile and Key Financial Indicators This section presents the company's basic information, key financial performance, accounting standard differences, and non-recurring profit and loss items Company Information This section provides the company's basic details, including names, legal representative, contact information, and stock listing information Company Basic Information | Item | Information | | :--- | :--- | | Chinese Name | 华电国际电力股份有限公司 | | Chinese Short Name | 华电国际 | | English Name | HUADIAN POWER INTERNATIONAL CORPORATION LIMITED | | Legal Representative | Mr. Wang Xuxiang | | A-Share Listing Exchange | Shanghai Stock Exchange | | A-Share Stock Ticker/Code | 华电国际 / 600027 | | H-Share Listing Exchange | Hong Kong Stock Exchange | | H-Share Stock Ticker/Code | 华电国际电力股份 / 01071 | Key Accounting Data and Financial Indicators In H1 2020, net profit attributable to shareholders grew significantly despite a decline in operating revenue Key Accounting Data for H1 2020 (Unit: RMB thousand) | Key Accounting Data | Current Period | Prior Year Period (Adjusted) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 41,531,486 | 44,140,958 | -5.91 | | Net Profit Attributable to Shareholders | 2,385,988 | 1,662,874 | 43.49 | | Net Profit Attributable to Shareholders (Excluding Non-recurring Items) | 2,126,905 | 1,600,528 | 32.89 | | Net Cash Flow from Operating Activities | 11,548,801 | 9,368,247 | 23.28 | Key Financial Indicators for H1 2020 | Key Financial Indicators | Current Period (Jan-Jun) | Prior Year Period (Adjusted) | Change | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share (RMB/share) | 0.198 | 0.146 | Increased by 35.62% | | Basic EPS Excluding Non-recurring Items (RMB/share) | 0.171 | 0.140 | Increased by 22.14% | | Weighted Average Return on Equity (%) | 4.19 | 3.26 | Increased by 0.93 percentage points | | Weighted Average ROE Excluding Non-recurring Items (%) | 3.64 | 3.16 | Increased by 0.48 percentage points | Accounting Data Differences under Domestic and International Standards This section outlines the differences in net profit and net assets under PRC and International accounting standards H1 2020 Net Profit and Period-end Net Assets Standards Reconciliation (Unit: RMB thousand) | Item | Net Profit (Current Period) | Net Assets (Period-end) | | :--- | :--- | :--- | | As per PRC Accounting Standards | 2,385,988 | 67,106,078 | | Business combinations under common control | -121,142 | 2,191,052 | | Government grants | 16,796 | -303,597 | | Maintenance fees, safety production fees | 54,819 | 39,301 | | Separation of "three supplies, one property" | -618 | - | | Tax impact of adjustments | 30,314 | -447,206 | | Attributable to minority interests | 45,278 | -416,163 | | As per International Accounting Standards | 2,411,435 | 68,169,465 | - Key differences between domestic and international accounting standards explained: - Business Combination: International standards require measurement at fair value, while PRC standards use book value for combinations under common control[20][21] - Government Grants: Under IFRS, some grants are recognized as deferred income, while under PRC GAAP, some are credited to capital reserve[20][21] - Maintenance/Safety Fees: Under IFRS, these are treated as profit distribution upon provision, while under PRC GAAP, they are expensed in the current period[20][21] - "Three Supplies, One Property" Separation: Under IFRS, transferred assets are recognized in current profit/loss, while under PRC GAAP, related losses are offset against equity[20][21] Non-recurring Profit and Loss Items The company's non-recurring profit and loss totaled RMB 259 million, mainly from government grants and asset disposals Non-recurring Profit and Loss Items for H1 2020 (Unit: RMB thousand) | Non-recurring P&L Item | Amount | | :--- | :--- | | Gain/Loss on disposal of non-current assets | 25,405 | | Government grants recognized in current profit or loss | 98,681 | | Reversal of impairment provision for individually tested receivables and contract assets | 7,108 | | Gains from entrusted loans | 7,597 | | Other non-operating income and expenses | 161,789 | | Minority interest impact | -16,163 | | Income tax impact | -25,334 | | Total | 259,083 | Company Business Overview This section details the company's primary business operations, operating model, industry context, and core competitive strengths Main Business, Operating Model, and Industry Overview The company is a large integrated energy firm in China, primarily engaged in constructing and operating power plants - The company's main business is selling electricity and heat products in the regions where its power assets are located, accounting for approximately 87% of its main business revenue[24] Controlling Installed Capacity Structure (as of the reporting date) | Energy Type | Controlling Installed Capacity (million kW) | Percentage | | :--- | :--- | :--- | | Coal-fired Power | 43.235 | 76% | | Gas-fired Power | 6.8781 | 12% | | Renewable Energy (Hydro, Wind, Solar) | 6.8402 | 12% | | Total | 56.9533 | 100% | Core Competency Analysis The company's core competitiveness lies in its scale, advanced equipment, management experience, and strong governance - The company's core competencies include: - Scale Advantage: One of the largest listed power generation companies in China by installed capacity, with assets across 14 provinces and a relatively complete industrial chain[25] - Advanced Equipment: Over 90% of its thermal power units are large-capacity, high-efficiency, and environmentally friendly units of 300 MW or above, with units of 600 MW and above accounting for about 60%, far exceeding the national average[26] - Management Experience: Possesses an experienced management and technical team with extensive experience in power plant construction and operation[27] - Corporate Governance: As a dually-listed company, it has established a standardized internal management and control system, enjoying a good market reputation and strong financing capabilities[27] Discussion and Analysis of Operations This section reviews operational performance, business segments, asset and liability status, investments, and key risks Overall Analysis of Operations In H1 2020, net profit grew 43.49% to RMB 2.386 billion despite lower power generation and revenue, driven by reduced fuel costs H1 2020 Operating Performance Overview | Indicator | H1 2020 | YoY Change | | :--- | :--- | :--- | | Cumulative Power Generation | 92.976 billion kWh | -8.66% | | On-grid Power Generation | 87.062 billion kWh | -8.53% | | Total Operating Revenue | RMB 41.531 billion | -5.91% | | Operating Costs | RMB 34.570 billion | -9.45% | | Net Profit Attributable to Parent | RMB 2.386 billion | +43.49% | | Basic EPS | RMB 0.198 | +35.62% | - The decrease in power generation was mainly due to the impact of the COVID-19 pandemic and increased external power purchases in the Shandong region[28] - The company's power supply coal consumption was 288.52 g/kWh, significantly lower than the national average, reflecting high operational efficiency[28] Company's Controlling Installed Capacity The company's installed capacity is diversified, with a clear trend towards clean energy in its new and under-construction projects Newly Added Installed Capacity in H1 2020 (MW) | Project | Unit Type | Capacity (MW) | | :--- | :--- | :--- | | Shijiazhuang Heating Group | Gas-fired Power | 4 | | Shuoluohe Company | Hydropower | 124 | | Longkou Dongyi Wind Power Co. | Wind Power | 50 | | Shandong New Energy Co. | Wind Power | 40 | | Ningxia New Energy Co. | Wind Power | 100 | | Ningxia New Energy Co. | Solar Power | 70 | | Total | - | 388 | Major Units Under Construction (MW) | Unit Type | Planned Installed Capacity (MW) | | :--- | :--- | | Coal-fired Power Units | 510 | | Gas-fired Power Units | 1,629 | | Hydropower Units | 168 | | Wind Power Units | 1,716.5 | | Photovoltaic Power Units | 11.3 | | Total | 4,034.8 | Analysis of Main Business In H1 2020, operating revenue fell due to lower power generation, but operating profit grew 42.21% as cost reductions outpaced the revenue decline Analysis of Financial Statement Item Changes in H1 2020 (Unit: RMB thousand) | Account | Current Period | Prior Year Period (Restated) | Change (%) | Main Reason | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 41,531,486 | 44,140,958 | -5.91 | Decrease in power generation | | Operating Costs | 34,570,239 | 38,179,877 | -9.45 | Decrease in power generation and coal prices | | Finance Costs | 2,379,309 | 2,623,631 | -9.31 | Reduced interest-bearing debt and financing costs | | Net Cash Flow from Operating Activities | 11,548,801 | 9,368,247 | 23.28 | Increased company profitability | Analysis of Assets and Liabilities As of June 30, 2020, the company's balance sheet saw significant changes in working capital accounts and debt structure Major Changes in Balance Sheet Items (Unit: RMB thousand) | Item Name | End of Current Period | End of Prior Year Period | Change (%) | Main Reason | | :--- | :--- | :--- | :--- | :--- | | Notes Receivable | 3,201,669 | 1,645,555 | 94.56 | Increased scale of electricity bill settlement via notes | | Contract Liabilities | 493,243 | 1,757,069 | -71.93 | End of heating season, reduced prepaid heating fees | | Employee Benefits Payable | 580,481 | 236,568 | 145.38 | Impact of employee compensation payment schedule | | Non-current Liabilities Due within One Year | 8,621,349 | 13,286,633 | -35.11 | Repayment of medium-term notes and long-term loans | | Other Current Liabilities | 316,107 | 3,573,409 | -91.15 | Repayment of super short-term financing bills | - As of June 30, 2020, certain subsidiaries pledged electricity and heating fee collection rights of approximately RMB 17.589 billion and mortgaged power generation units, equipment, land use rights, and mining rights of approximately RMB 4.162 billion to secure loans[44] Analysis of Investment Status As of June 30, 2020, the company's long-term equity investment was RMB 11.831 billion, a slight increase from the beginning of the year Significant Changes in Equity Investments (Unit: RMB thousand) | Company Name | Business Scope | Shareholding (%) | Change in Amount | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Huadian Coal Industry Group Co., Ltd. | Coal industry development and supply | 12.98 | 108,276 | 6.64 | | Otog Front Banner Great Wall Coal Mine Co., Ltd. | Sales of coal mining machinery and accessories | 35 | 47,652 | 6.27 | | Guodian Inner Mongolia Dongsheng Thermal Power Co., Ltd. | Power generation, sales, and heating | 20 | 22,031 | 14.12 | | China Huadian Finance Co., Ltd. | Financial services | 16.46 | -54,267 | -4.02 | | Xibaipo Second Power Generation Co., Ltd. | Power generation and sales | 35 | -44,073 | -8.45 | Analysis of Major Subsidiaries and Investees Huadian Hubei Power Generation Co., Ltd. was the main subsidiary contributing over 10% to the company's net profit Key Financial Data of Huadian Hubei Power Generation Co., Ltd. (Unit: RMB thousand) | Indicator | Amount | | :--- | :--- | | Total Assets (2020-06-30) | 18,614,493 | | Net Assets (2020-06-30) | 8,370,329 | | Operating Revenue (H1 2020) | 4,577,485 | | Net Profit (H1 2020) | 537,764 | Potential Risks The company faces three main risks: electricity market risk, coal market risk, and environmental risk - Key risks and mitigation strategies: - Electricity Market Risk: Uncertain power demand due to COVID-19 and trade protectionism, along with pressure from external power purchases and market competition, may impact generation volume and tariffs; the company will enhance marketing and adopt differentiated strategies[51] - Coal Market Risk: Capacity adjustments in major production areas and cross-regional transportation create uncertainty in coal supply and prices; the company will strengthen market analysis and optimize procurement and inventory control[51] - Environmental Risk: Stricter environmental regulations may increase compliance expenditures; the company will rigorously implement environmental policies and enhance facility maintenance to ensure compliance[51] Important Matters This section covers profit distribution, commitment fulfillment, related-party transactions, contracts, and social responsibility initiatives Profit Distribution Plan The company has no profit distribution or capitalization of capital reserve plan for the first half of 2020 - The Board of Directors has resolved that there will be no profit distribution plan or capitalization of capital reserve for the first half of 2020[4][55] Fulfillment of Commitments The company and its controlling shareholder, China Huadian Corporation, have strictly fulfilled all commitments during the reporting period - The controlling shareholder, China Huadian, has committed to injecting its non-listed conventional energy generation assets into the company within three years after they meet the injection criteria to resolve inter-industry competition, and this commitment is in progress[57] - China Huadian committed not to sell the 1.15 billion A-shares subscribed in the non-public offering on July 18, 2014, for 72 months (until July 18, 2020), and this commitment was strictly fulfilled during the reporting period[57][96] Significant Related-Party Transactions The company engaged in significant related-party transactions, primarily involving fuel and equipment procurement, engineering, and financial services - The company has ongoing daily related-party transactions with its controlling shareholder, China Huadian, and its affiliates in areas such as fuel procurement, engineering services, and financial services, with all transaction amounts within the annual caps[62][63][64] Related-Party Borrowings (Unit: RMB thousand) | Related Party | Relationship | Opening Balance | Current Period Amount | Closing Balance | | :--- | :--- | :--- | :--- | :--- | | China Huadian | Controlling Shareholder | 2,570,000 | 3,830,000 | 6,400,000 | | Huadian Finance | Subsidiary of Parent Company | 8,513,060 | -478,033 | 8,035,027 | | Total | | 11,083,060 | 3,351,967 | 14,435,027 | Major Contracts and Guarantees The company had no major custody, contracting, or leasing matters, while its guarantee exposure remains low and controllable Total Guarantees (Unit: RMB thousand) | Item | Amount | | :--- | :--- | | Total year-end guarantee balance for subsidiaries (B) | 81,625 | | Total year-end external guarantee balance (A) | 43,575 | | Total Guarantees (A+B) | 125,200 | | Total Guarantees as a percentage of Net Assets (%) | 0.14 | Poverty Alleviation Work In H1 2020, the company actively fulfilled its social responsibilities by investing in targeted poverty alleviation efforts Targeted Poverty Alleviation Achievements in H1 2020 | Indicator | Amount and Progress | | :--- | :--- | | Funds Invested | RMB 4.9738 million | | Value of Materials Donated | RMB 64,500 | | Number of Registered Poor People Lifted out of Poverty | 1,443 people | | Number of Industrial Poverty Alleviation Projects | 8 | | Investment in Industrial Poverty Alleviation Projects | RMB 2.8993 million | Environmental Information The company prioritizes environmental protection, with most coal-fired units achieving ultra-low emissions through continuous investment - The company continues to increase investment in environmental protection facilities for its coal-fired power plants, with the vast majority of units achieving ultra-low emissions and ensuring the normal operation of these facilities[82][84] - As of the reporting date, the company was fined a total of RMB 595,000 for environmental issues (fugitive emissions and others)[82][83] Share Capital Changes and Shareholder Information This section provides details on the company's shareholder structure as of the end of the reporting period Shareholder Information As of the period-end, the company had 114,783 ordinary shareholders, with China Huadian Corporation as the largest shareholder Top Ten Shareholders at the End of the Reporting Period | Shareholder Name | Number of Shares Held | Percentage (%) | | :--- | :--- | :--- | | China Huadian Corporation Limited | 4,620,061,224 | 46.84 | | HKSCC Nominees Limited | 1,794,747,811 | 18.20 | | Shandong Development & Investment Holding Group Co., Ltd. | 800,766,729 | 8.12 | | China Securities Finance Corporation Limited | 397,071,140 | 4.03 | | Shenergy Company Limited | 142,800,000 | 1.45 | | China National Arts & Crafts Group Corporation Ltd. | 91,000,000 | 0.92 | | Central Huijin Asset Management Ltd. | 77,978,400 | 0.79 | | Shanghai Electric Group Company Limited | 75,000,005 | 0.76 | | National Social Security Fund Portfolio 103 | 65,990,592 | 0.67 | | Caitong Fund - Bank of Ningbo - Cinda Guocui Equity Investment Fund | 43,780,292 | 0.44 | Information on Preferred Shares The company had no preferred shares during the reporting period - During the reporting period, the company had no preferred shares[98] Directors, Supervisors, and Senior Management This section details the changes in the company's board of directors, supervisory committee, and senior management during the period Changes in Directors, Supervisors, and Senior Management The company's board, supervisory committee, and senior management underwent significant personnel changes during the reporting period Key Changes in Directors, Supervisors, and Senior Management | Name | Position | Change | | :--- | :--- | :--- | | Luo Xiaoqian | Director, General Manager | Elected, Appointed | | Peng Xingyu | Director | Elected | | Hao Bin | Director | Elected | | Feng Rong | Director | Elected | | Tian Hongbao | Former Vice Chairman, Director, General Manager | Resigned | | Chen Haibin | Former Director | Resigned | | Tao Yunpeng | Former Director | Resigned | Information on Corporate Bonds This section provides an overview of the company's outstanding corporate bonds, use of proceeds, credit ratings, and debt service capabilities Basic Information on Corporate Bonds As of the period-end, the company had several series of corporate bonds outstanding with a total balance of RMB 7 billion Overview of Outstanding Corporate Bonds | Bond Ticker | Code | Maturity Date | Bond Balance (RMB billion) | Interest Rate (%) | | :--- | :--- | :--- | :--- | :--- | | 18 Huadian Y1 | 143992.SH | 2021-07-17 | 1.50 | 5.00 | | 18 Huadian Y2 | 143993.SH | 2023-07-17 | 1.50 | 5.20 | | 18 Huadian Y3 | 143963.SH | 2021-08-15 | 1.15 | 4.87 | | 18 Huadian Y4 | 143965.SH | 2023-08-15 | 0.85 | 5.05 | | 19HDGJ01 | 155747.SH | 2022-10-17 | 2.00 | 3.58 | Use of Proceeds from Bond Issuance The proceeds from all issued corporate bonds have been fully used as disclosed in the respective offering circulars - The proceeds from each bond issuance have been fully utilized for their disclosed purposes (repayment of company debt and supplementing working capital) after deducting issuance costs[107] Corporate Bond Credit Ratings The company maintains a AAA corporate credit rating with a stable outlook, and all its issued bonds also carry a AAA rating - The company's corporate credit rating is AAA with a stable outlook; all outstanding corporate bonds are also rated AAA[108][109] Financial Indicators Related to Debt Service Ability The company's debt service indicators remained robust, with improved liquidity ratios and a stronger interest coverage multiple Key Debt Service Financial Indicators | Key Indicator | End of Current Period / Current Period | End of Prior Year / Prior Year Period | Change | | :--- | :--- | :--- | :--- | | Current Ratio | 0.44 | 0.40 | Increased by 10.00% | | Quick Ratio | 0.39 | 0.35 | Increased by 11.43% | | Asset-Liability Ratio (%) | 61.42 | 65.61 | Decreased by 4.19 percentage points | | EBITDA Interest Coverage Ratio | 4.71 | 3.74 | Increased by 25.94% | Bank Credit Facilities The company maintains excellent credit standing and has access to substantial unused credit facilities from major domestic banks - As of the end of the reporting period, the company had total bank credit facilities of RMB 244.2 billion, with an unused amount of RMB 139.4 billion[116] Financial Report This section contains the unaudited consolidated financial statements and accompanying notes for the first half of 2020 Consolidated Financial Statements This section presents the unaudited H1 2020 consolidated financial statements, showing enhanced profitability and an optimized balance sheet Consolidated Income Statement Core Data (Jan-Jun 2020, Unit: RMB thousand) | Item | Current Period Amount | Prior Period Amount (Restated) | | :--- | :--- | :--- | | Total Operating Revenue | 41,531,486 | 44,140,958 | | Total Operating Costs | 38,191,515 | 41,972,440 | | Operating Profit | 3,835,300 | 2,696,929 | | Total Profit | 4,018,352 | 2,720,180 | | Net Profit | 3,182,069 | 2,174,165 | | Net Profit Attributable to Parent Company Shareholders | 2,385,988 | 1,662,874 | Consolidated Balance Sheet Core Data (as of 2020-06-30, Unit: RMB thousand) | Item | Period-end Balance | Beginning-of-Period Balance | | :--- | :--- | :--- | | Total Assets | 227,832,489 | 229,875,595 | | Total Liabilities | 139,940,743 | 150,820,587 | | Total Equity Attributable to Parent Company Shareholders | 67,106,078 | 61,510,437 | | Total Shareholders' Equity | 87,891,746 | 79,055,008 | Consolidated Cash Flow Statement Core Data (Jan-Jun 2020, Unit: RMB thousand) | Item | Current Period Amount | Prior Period Amount (Restated) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 11,548,801 | 9,368,247 | | Net Cash Flow from Investing Activities | -6,191,443 | -4,138,754 | | Net Cash Flow from Financing Activities | -5,778,870 | -2,646,388 | | Net Increase in Cash and Cash Equivalents | -421,512 | 2,583,105 | Notes to the Financial Statements The notes provide detailed explanations of accounting policies and key items in the consolidated financial statements - The company adopted several new accounting standards and interpretations issued by the Ministry of Finance starting January 1, 2020, which did not have a material impact on its financial position or operating results[230][232][233] - Certain subsidiaries of the company enjoy preferential tax policies, including a 15% preferential tax rate for Western Development and "three-year exemption, three-year half" income tax benefits for engaging in state-supported public infrastructure projects[236][237][238] - The company has extensive related-party transactions with its controlling shareholder, China Huadian, and its subsidiaries, including procurement/sales, provision/receipt of services, related-party leases, guarantees, and fund borrowing, all conducted within pre-agreed framework agreements[356][360][361] Directory of Documents for Inspection This section lists the reference documents available for inspection, including signed financial statements and public filings - This section lists the available reference documents, including financial statements signed and sealed by the responsible persons, originals of all company documents and announcements publicly disclosed during the reporting period, and the interim report announced on the Hong Kong Stock Exchange[397]