Huaneng Hydropower(SH:600025)2025-08-31 16:21Summary of Huaneng Hydropower - A Conference Call Company Overview - Company: Huaneng Lancang River Hydropower Co., Ltd. (Huaneng Hydro) - Industry: Utilities and Environmental - Operating Capacity: 25.6 GW as of end-2023 - Major Shareholder: China Huaneng Power Group (50.4% stake) Key Financial Highlights - 2Q25 Attributable Earnings: Rmb 3.1 billion, flat year-over-year, exceeding expectations due to stronger power tariffs [2][3] - 2Q25 Generation: 31.1 billion kWh, up 3% year-over-year [3] - Revenue for 1H25: Rmb 12.96 billion, a 9.1% increase year-over-year, driven by a 13% growth in generation [10] - Net Profit Attributable to Shareholders: Rmb 4.61 billion for 1H25, a 10.5% increase year-over-year [10] - EPS Basic: Rmb 0.25 for 1H25, a 13.6% increase year-over-year [10] Tariff and Cost Analysis - Power Tariff in 2Q25: Estimated to be down 1% year-over-year, showing improvement from a 7% decline in 1Q25 [3] - Business Taxes and Surcharges: Increased by 143% year-over-year in 2Q25 [4] - Net Gearing Ratio: Increased by 4 percentage points half-on-half in 1H25, reaching 99% [4] Market Outlook and Expectations - Consensus Revisions: Potential upside revisions to consensus expected following the results [5] - Stock Reaction: Anticipated slight positive share price reaction to the earnings report [6] - Upcoming Analyst Briefing: Scheduled for September 5 at 3 PM [7] Investment Thesis - Structural Growth Prospects: Huaneng Hydro is positioned for growth due to rising market-based tariffs in Yunnan and a significant capacity addition pipeline [14] - Valuation: Price target set at Rmb 10.00, derived from a 50% DCF and 50% P/BV multiple of 2.0x [15][16] - Risks: Downside risks include lower utilization and hydropower tariffs, while upside risks include higher utilization and tariffs [17] Additional Insights - Hydropower Capacity Pipeline: Approximately 12.1 GW in the pipeline for long-term development [14] - Yield Angle: Current yield spread vs. CN 10-year bond at over 200 bps compared to a historical average of ~110 bps [2] This summary encapsulates the key points from the conference call regarding Huaneng Hydropower, highlighting financial performance, market outlook, and investment considerations.