Huaneng Power International Inc Net Income dropped on 36.1% in 2016 and Revenue dropped on 11.8%
21/03/2017 • About Huaneng Power International Inc (
$902) • By InTwits
Huaneng Power International Inc reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Huaneng Power International Inc is a company in decline: 2016 revenue growth was -11.8%, 5 years revenue CAGR was -3.3%
- Huaneng Power International Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 16.0%. At the same time it's a lot of higher than industry average of 0.5%.
- CAPEX is quite volatile: 3,273 in 2016, 2,419 in 2015, 6,258 in 2014, 4,577 in 2013, 1,703 in 2012
- The company has potentially unprofitable business model: ROIC is at 6.6%
- It operates with high leverage: Net Debt/EBITDA is 5.0x while industry average is 3.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Huaneng Power International Inc ($902) key annual financial indicators
| mln. CNY | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 133,295 | 132,789 | 138,978 | 127,747 | 112,636 | -11.8% |
| Gross Profit | | | 34,446 | 36,226 | 23,246 | -35.8% |
| SG&A | | | 3,733 | 3,696 | 3,046 | -17.6% |
| EBITDA | 28,213 | 35,657 | 41,455 | 43,427 | 33,541 | -22.8% |
| Net Income | 5,512 | 10,426 | 12,183 | 13,786 | 8,520 | -38.2% |
Balance Sheet
|
|---|
| Cash | 10,505 | 9,307 | 13,021 | 7,478 | 7,811 | 4.4% |
| Short Term Debt | 71,949 | 71,560 | 81,503 | 94,556 | 98,404 | 4.1% |
| Long Term Debt | 95,545 | 84,356 | 94,721 | 78,193 | 77,694 | -0.6% |
Cash flow
|
|---|
| Capex | 15,556 | 17,697 | 25,044 | 24,334 | 20,234 | -16.8% |
Ratios
|
|---|
| Revenue growth | 0.3% | -0.4% | 4.7% | -8.1% | -11.8% | |
| EBITDA growth | 35.4% | 26.4% | 16.3% | 4.8% | -22.8% | |
| Gross Margin | | | 24.8% | 28.4% | 20.6% | -7.7% |
| EBITDA Margin | 21.2% | 26.9% | 29.8% | 34.0% | 29.8% | -4.2% |
| Net Income Margin | 4.1% | 7.9% | 8.8% | 10.8% | 7.6% | -3.2% |
| SG&A, % of revenue | | | 2.7% | 2.9% | 2.7% | -0.2% |
| CAPEX, % of revenue | 11.7% | 13.3% | 18.0% | 19.0% | 18.0% | -1.1% |
| ROIC | 7.3% | 10.3% | 11.3% | 10.9% | 6.6% | -4.3% |
| ROE | 10.3% | 17.6% | 17.7% | 17.9% | 10.0% | -7.8% |
| Net Debt/EBITDA | 5.6x | 4.1x | 3.9x | 3.8x | 5.0x | 1.2x |
Huaneng Power International Inc ($902) key quoterly financial indicators
| mln. CNY | 16Q1 | 16Q2 | 16Q3 | 16Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 34,607 | 28,977 | 35,853 | 37,260 | | | | |
| Net Income | 5,005 | 2,775 | 3,352 | -749 | | | | |
Balance Sheet
|
|---|
| Cash | 9,058 | 8,859 | 7,650 | 10,214 | | | | |
| Short Term Debt | 68,730 | 82,573 | 64,209 | 117,183 | | | | |
| Long Term Debt | 78,925 | 83,735 | 83,106 | 110,077 | | | | |
Ratios
|
|---|
| Gross Margin | 31.3% | 25.1% | 23.2% | 5.9% | | | | |
| Net Income Margin | 14.5% | 9.6% | 9.3% | -2.0% | | | | |
Revenue and profitability
The company's Revenue dropped on 11.8%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.77 pp from 9.8% to 10.5% in 2016.
Gross Margin decreased on 7.7 pp from 28.4% to 20.6% in 2016. SG&A as a % of Revenue showed almost no change in 2016.
Net Income marign decreased on 3.2 pp from 10.8% to 7.6% in 2016.
Capital expenditures (CAPEX) and working capital investments
In 2016 Huaneng Power International Inc had CAPEX/Revenue of 18.0%. The company showed CAPEX/Revenue growth of 4.6 pp from 13.3% in 2013 to 18.0% in 2016. It's average level of CAPEX/Revenue for the last three years was 18.3%.Huaneng Power International Inc invested a big chunk of EBITDA (60.3%) to CAPEX which didn't stop revenue from falling.
Return on investment
The company operates at low ROIC (6.59%) and ROE (10.02%). ROIC decreased on 4.3 pp from 10.9% to 6.6% in 2016. ROE decreased on 7.8 pp from 17.9% to 10.0% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 5.0x and Debt / EBITDA is 5.3x. Net Debt / EBITDA surged on 1.2x from 3.8x to 5.0x in 2016. Debt increased slightly on 1.9% while cash increased on 4.4%.
Appendix 1: Peers in Electric
Below we provide Huaneng Power International Inc benchmarking against other companies in Electric industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Huaneng Renewables Corp Ltd ($958) | 26.0% | 46.7% | 4.1% | 19.6% | |
| CGN Power Co Ltd ($1816) | | -1.2% | 19.3% | 12.3% | 41.4% |
| Huadian Fuxin Energy Corp Ltd ($816) | 56.0% | 16.7% | 4.9% | 10.4% | |
| China Datang Corp Renewable Power Co Ltd ($1798) | | 28.9% | -7.9% | 7.8% | 3.5% |
| HK Electric Investments & HK Electric Investments Ltd ($2638) | | -1.8% | 2.9% | 6.7% | 1.9% |
| |
|---|
| Median (16 companies) | 8.8% | 11.6% | 6.1% | -2.4% | 1.9% |
|---|
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Power Assets Holdings Ltd ($6) | 60.0% | 63.5% | 85.6% | 99.4% | 99.5% |
| China Power New Energy Development Co Ltd ($735) | 73.3% | 70.8% | 72.0% | 74.9% | |
| HK Electric Investments & HK Electric Investments Ltd ($2638) | 60.1% | 58.6% | 54.0% | 53.7% | 53.0% |
| CGN Power Co Ltd ($1816) | 46.5% | 46.9% | 48.6% | 47.9% | 43.7% |
| Tianjin Development Hldgs Ltd ($882) | 8.5% | 5.0% | 18.7% | 18.6% | |
| |
|---|
| Median (6 companies) | 46.5% | 52.8% | 48.6% | 50.8% | 48.3% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Huaneng Renewables Corp Ltd ($958) | 94.0% | 80.5% | 91.3% | 93.1% | |
| China Datang Corp Renewable Power Co Ltd ($1798) | 90.5% | 82.8% | 87.0% | 82.4% | |
| HK Electric Investments & HK Electric Investments Ltd ($2638) | 72.6% | 77.6% | 73.3% | 71.7% | 70.4% |
| Power Assets Holdings Ltd ($6) | 66.2% | 68.0% | 2,533.1% | 71.2% | -84.2% |
| CGN Power Co Ltd ($1816) | 66.0% | 62.6% | 60.5% | 59.4% | 52.9% |
| |
|---|
| Median (16 companies) | 30.3% | 36.4% | 38.2% | 47.0% | 30.2% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Enerchina Holdings Ltd ($622) | 24.1% | 28.3% | 3.8% | 321.6% | |
| Huaneng Renewables Corp Ltd ($958) | 163.4% | 124.0% | 217.8% | 171.9% | |
| China Power New Energy Development Co Ltd ($735) | 82.2% | 80.1% | 119.5% | 99.0% | |
| Huadian Fuxin Energy Corp Ltd ($816) | 62.2% | 54.3% | 91.8% | 96.0% | |
| China Datang Corp Renewable Power Co Ltd ($1798) | 157.1% | 81.7% | 106.3% | 93.4% | |
| |
|---|
| Median (16 companies) | 29.6% | 28.3% | 17.4% | 20.6% | 12.3% |
|---|
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CLP Holdings Ltd ($2) | 7.0% | 4.8% | 8.5% | 12.8% | 10.1% |
| China Resources Power Holdings Co Ltd ($836) | 7.7% | 9.7% | 8.0% | 11.0% | |
| China Power International Development Ltd ($2380) | 5.7% | 7.5% | 8.0% | 10.1% | |
| Huadian Power International Corp Ltd ($1071) | 5.0% | 8.4% | 10.4% | 10.0% | |
| Amber Energy Ltd ($90) | 5.4% | 4.6% | 3.6% | 8.6% | |
| |
|---|
| Median (16 companies) | 5.2% | 6.0% | 6.0% | 5.3% | 5.1% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| CGN Meiya Power Holdings Co Ltd ($1811) | 9.1x | 8.1x | 4.3x | 8.6x | 6.5x |
| China Datang Corp Renewable Power Co Ltd ($1798) | 9.1x | 8.2x | 8.7x | 8.5x | |
| CGN Power Co Ltd ($1816) | 6.5x | 6.7x | 7.8x | 8.4x | 9.3x |
| China Power New Energy Development Co Ltd ($735) | 4.8x | 5.5x | 6.4x | 7.9x | |
| Huadian Fuxin Energy Corp Ltd ($816) | 6.9x | 6.2x | 6.5x | 7.4x | |
| |
|---|
| Median (14 companies) | 5.8x | 5.6x | 5.1x | 5.2x | 5.7x |
|---|
