Huaneng Power International's Q1 2024 results exceeded expectations, with positive market feedback.

On the evening of April 23, 2024, Huaneng Power International released its first-quarter performance report for 2024.

During the reporting period, the company achieved operating revenue of 65.367 billion yuan, a year-on-year increase of 0.15%, and net profit attributable to shareholders of 4.596 billion yuan, a year-on-year increase of 1.04 times. The net cash flow from operating activities was 12.143 billion yuan, a year-on-year increase of 97.81%, and the asset-liability ratio was 67.58%, a year-on-year decrease of 3.72 percentage points.

The company's gross profit margin was 16.07%, a year-on-year increase of 5.99 percentage points. Basic earnings per share were 0.25 yuan, a year-on-year increase of 1.50 times, and diluted return on equity was 3.37%, a year-on-year increase of 1.61 percentage points.

The inventory turnover ratio was 5.02 times, a year-on-year decrease of 0.13 times, and the total asset turnover ratio was 0.12 times, a year-on-year decrease of 0.01 times.

Sales expenses were approximately 47.6 million yuan, administrative expenses were approximately 1.379 billion yuan, and financial expenses were approximately 2.048 billion yuan.

The company's total R&D expenses were 206 million yuan, accounting for 0.31% of operating revenue, a year-on-year increase of 0.02 percentage points.

The company stated that the significant growth in performance was mainly due to a year-on-year decrease in fuel costs for domestic business units and a year-on-year increase in electricity generation.

As a domestic thermal power giant, the report card for the first quarter of 2024 exceeded market expectations. The significant increase in net profit attributable to shareholders fully reflects the company's advantages in the upstream and downstream sectors.

In the first quarter of 2024, coal prices had already declined compared to the previous period, with a noticeable drop in March. As an important domestic thermal power group, the decline in fuel costs had a direct impact on Huaneng Power International.

As the proportion of new energy sources such as photovoltaic and wind power in the grid gradually increases and electricity prices show a downward trend, thermal power, as an important balancing resource for the grid, plays a crucial role. Everbright Securities research report pointed out that in terms of energy supply and alleviating absorption issues, adjustable and controllable thermal power is the ballast of the power system. It effectively compensates for the power supply-demand gap in terms of power and releases more space for new energy absorption in terms of electricity.

Objectively speaking, in recent years, new energy industries such as photovoltaic and wind power have developed rapidly. However, traditional thermal power and hydropower still play important roles in the power market. In many water-scarce regions in China, thermal power remains an important energy source.

Moreover, in the future, the absorption of more new energy will require more thermal power capacity for balance.

In 2022-2023, the fluctuation in raw material prices was a significant factor affecting thermal power generation companies. For a long time, coal prices remained high. Recently, as coal prices have stabilized and supply-demand tensions have eased, the controllable costs of thermal power companies and the increase in electricity consumption due to downstream economic recovery have contributed to the release of profits for thermal power companies.

Market institutions believe that the stability of long-term contract electricity prices, the introduction of coal power capacity pricing policies, and the improvement of auxiliary service markets and spot trading markets will provide stable profit expectations for coal power units, thereby facilitating the realization of multi-dimensional value in the power industry.

In the long term, Huaneng Power International has gradually entered a stage of rapid profit release.