HTSC·2026-03-25 05:45Investment Rating - The investment rating for Huaneng International is maintained as "Buy" for both A-shares and H-shares [6]. Core Views - The report expresses confidence in the company's profitability for 2026, despite a significant decline in annual long-term contract electricity prices across provinces [1]. - The company is expected to leverage its trading capabilities to mitigate the impact of falling average electricity prices while focusing on cost reduction and efficiency improvements to achieve stable profit growth [1]. - The report anticipates that the company's net profit for 2026 will be approximately 145 billion RMB, with a slight increase in subsequent years [4]. Summary by Relevant Sections Financial Performance - In 2025, the company's revenue decreased by 6.6% to 229.29 billion RMB, while the net profit attributable to shareholders increased by 42.2% to 14.41 billion RMB [1]. - The company plans to distribute a dividend of 0.40 RMB per share, resulting in a dividend payout ratio of 53.96% [1]. - The total profit from domestic coal power generation increased by 2 cents to 3.9 cents per kilowatt-hour, despite a 3.2% decrease in the electricity price [2]. New Energy Sector - In 2025, the company added 7,731 MW of controllable new energy capacity, a decrease of 17.9% year-on-year [1]. - The profit from wind and solar energy projects in 2025 was 56.08 billion RMB and 28.83 billion RMB, respectively, totaling 84.91 billion RMB, which represents a 10.6% decline year-on-year [3]. - The report projects a further decrease in capital expenditure for solar energy in 2026, with total capital expenditure expected to be 621 billion RMB, a 9.5% increase from 2025 [3]. Valuation and Target Price - The target price for A-shares is set at 9.02 RMB and for H-shares at 7.41 HKD, reflecting a premium due to the stronger profitability of the new energy sector and robust performance in coal power [5]. - The report assigns a PE ratio of 26.0x and a PB ratio of 1.10x for the company's 2026 earnings, indicating a favorable valuation compared to peers [5].