Huaneng Power International Inc Net Income dropped on 79.0% while Revenue jumped on 34.1%
13/03/2018 • About Huaneng Power International Inc (
$902) • By InTwits
Huaneng Power International Inc reported 2017 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Huaneng Power International Inc has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.1%. At the same time it's a lot of higher than industry average of 0.5%.
- CAPEX is quite volatile: 4,631 in 2017, 3,273 in 2016, 2,419 in 2015, 6,258 in 2014, 4,577 in 2013
- The company has potentially unprofitable business model: ROIC is at 3.7%
- It operates with high leverage: Net Debt/EBITDA is 7.6x while industry average is 2.7x
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 | 2013 | 2014 | 2015 | 2016 | 2017 | 2017/2016 |
|---|
P&L
|
|---|
| Revenue | 132,789 | 138,978 | 127,747 | 112,636 | 151,083 | 34.1% |
| Gross Profit | | 34,446 | 36,226 | 23,246 | 15,874 | -31.7% |
| SG&A | | 3,733 | 3,696 | 3,046 | 3,550 | 16.5% |
| EBITDA | 35,657 | 41,455 | 43,427 | 33,541 | 30,433 | -9.3% |
| Net Income | 10,426 | 12,183 | 13,786 | 8,520 | 1,793 | -79.0% |
Balance Sheet
|
|---|
| Cash | 9,307 | 13,021 | 7,478 | 7,811 | 9,282 | 18.8% |
| Short Term Debt | 71,560 | 81,503 | 94,556 | 98,404 | 115,618 | 17.5% |
| Long Term Debt | 84,356 | 94,721 | 78,193 | 77,694 | 124,154 | 59.8% |
Cash flow
|
|---|
| Capex | 17,697 | 25,044 | 24,334 | 20,234 | 26,045 | 28.7% |
Ratios
|
|---|
| Revenue growth | -0.4% | 4.7% | -8.1% | -11.8% | 34.1% | |
| EBITDA growth | 26.4% | 16.3% | 4.8% | -22.8% | -9.3% | |
| Gross Margin | | 24.8% | 28.4% | 20.6% | 10.5% | -10.1% |
| EBITDA Margin | 26.9% | 29.8% | 34.0% | 29.8% | 20.1% | -9.6% |
| Net Income Margin | 7.9% | 8.8% | 10.8% | 7.6% | 1.2% | -6.4% |
| SG&A, % of revenue | | 2.7% | 2.9% | 2.7% | 2.3% | -0.4% |
| CAPEX, % of revenue | 13.3% | 18.0% | 19.0% | 18.0% | 17.2% | -0.7% |
| ROIC | 10.3% | 11.3% | 10.9% | 6.6% | 3.7% | -2.9% |
| ROE | 17.6% | 17.7% | 17.9% | 10.0% | 2.2% | -7.8% |
| Net Debt/EBITDA | 4.1x | 3.9x | 3.8x | 5.0x | 7.6x | 2.6x |
Huaneng Power International Inc ($902) key quoterly financial indicators
| mln. CNY | 17Q1 | 17Q2 | 17Q3 | 17Q4 | YoY change |
|---|
P&L
|
|---|
| Revenue | 37,263 | 33,522 | 39,572 | 41,047 | 7.7% | 15.7% | 10.4% | 10.2% |
| Net Income | 652 | 136 | 2,027 | -1,067 | -87.0% | -95.1% | -39.5% | |
Balance Sheet
|
|---|
| Cash | 11,143 | 12,125 | 16,365 | 9,282 | 23.0% | 36.9% | 113.9% | -9.1% |
| Short Term Debt | 92,435 | 129,406 | 105,540 | 115,618 | 34.5% | 56.7% | 64.4% | -1.3% |
| Long Term Debt | 115,646 | 116,268 | 121,076 | 124,154 | 46.5% | 38.9% | 45.7% | 12.8% |
Ratios
|
|---|
| Gross Margin | 11.6% | 9.7% | 12.1% | 8.6% | -19.7% | -15.4% | -11.1% | 2.7% |
| Net Income Margin | 1.7% | 0.4% | 5.1% | -2.6% | -12.7% | -9.2% | -4.2% | -0.6% |
Revenue and profitability
The company's Revenue surged on 34.1%. Revenue growth showed slow down in 17Q4 - it was 10.2% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 0.62 pp from 20.4% to 21.0% in 2017.
Gross Margin dropped on 10.1 pp from 20.6% to 10.5% in 2017. SG&A as a % of Revenue showed almost no change in 2017.
Net Income marign decreased on 6.4 pp from 7.6% to 1.2% in 2017.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 17.2% in 2017. CAPEX/Revenue decreased slightly on 0.78 pp from 18.0% in 2014 to 17.2% in 2017. It's average CAPEX/Revenue for the last three years was 18.1%.The company invested a big chunk of EBITDA (85.6%) to CAPEX to secure its growth.
Return on investment
The company operates at low ROIC (3.69%) and ROE (2.20%). ROIC decreased on 2.9 pp from 6.6% to 3.7% in 2017. ROE decreased on 7.8 pp from 10.0% to 2.2% in 2017.
Leverage (Debt)
Debt level is 7.6x Net Debt / EBITDA and 7.9x Debt / EBITDA. Net Debt / EBITDA surged on 2.6x from 5.0x to 7.6x in 2017. Debt jumped on 36.2% while cash surged on 18.8%.
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 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| CNNC International Ltd ($2302) | 179.8% | -55.5% | -88.9% | 228.0% | |
| China Power New Energy Development Co Ltd ($735) | 20.3% | 7.2% | 2.6% | 96.6% | |
| CGN Power Co Ltd ($1816) | -1.2% | 19.3% | 12.3% | 41.4% | |
| Huadian Fuxin Energy Corp Ltd ($816) | 16.7% | 4.9% | 10.4% | 3.7% | |
| China Datang Corp Renewable Power Co Ltd ($1798) | 28.9% | -7.9% | 7.8% | 3.5% | |
| |
|---|
| Median (12 companies) | 11.8% | 6.1% | -2.4% | 0.2% | 15.9% |
|---|
Top companies by Gross margin, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| Power Assets Holdings Ltd ($6) | 63.5% | 85.6% | 99.4% | 99.5% | |
| HK Electric Investments & HK Electric Investments Ltd ($2638) | 58.6% | 54.0% | 53.7% | 53.0% | |
| CGN Power Co Ltd ($1816) | 46.9% | 48.6% | 47.9% | 43.7% | |
| CNNC International Ltd ($2302) | 12.3% | 7.6% | 2.7% | -8.0% | |
| |
|---|
| Median (4 companies) | 52.8% | 48.6% | 50.8% | 48.3% | |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| HK Electric Investments & HK Electric Investments Ltd ($2638) | 77.6% | 73.3% | 71.7% | 70.4% | |
| CGN Power Co Ltd ($1816) | 62.6% | 60.5% | 59.4% | 52.9% | |
| China Power International Development Ltd ($2380) | 39.0% | 42.3% | 53.6% | 45.3% | |
| China Resources Power Holdings Co Ltd ($836) | 33.9% | 33.2% | 41.9% | 38.8% | |
| CLP Holdings Ltd ($2) | 15.7% | 23.6% | 35.7% | 30.5% | 28.1% |
| |
|---|
| Median (8 companies) | 36.4% | 38.2% | 47.0% | 34.6% | 28.1% |
|---|
Top companies by CAPEX/Revenue, %
| Top | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| China Resources Power Holdings Co Ltd ($836) | 33.4% | 34.6% | 23.5% | 24.6% | |
| CLP Holdings Ltd ($2) | 8.1% | 10.0% | 13.5% | 12.3% | 10.4% |
| |
|---|
| Median (2 companies) | 28.3% | 17.4% | 20.6% | 18.5% | 10.4% |
|---|
Top companies by ROIC, %
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| CLP Holdings Ltd ($2) | 4.8% | 8.5% | 12.8% | 10.1% | 10.1% |
| China Resources Power Holdings Co Ltd ($836) | 9.7% | 8.0% | 11.0% | 9.2% | |
| China Power International Development Ltd ($2380) | 7.5% | 8.0% | 10.1% | 6.4% | |
| CGN Power Co Ltd ($1816) | 7.7% | 6.1% | 5.1% | 5.5% | |
| CGN Meiya Power Holdings Co Ltd ($1811) | 4.6% | 6.0% | 5.5% | 5.2% | |
| |
|---|
| Median (12 companies) | 6.0% | 6.0% | 5.3% | 5.4% | 10.1% |
|---|
Top companies by Net Debt / EBITDA
| Top 5 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 |
|---|
| CGN Power Co Ltd ($1816) | 6.7x | 7.8x | 8.4x | 9.3x | |
| CGN Meiya Power Holdings Co Ltd ($1811) | 8.1x | 4.3x | 8.6x | 6.5x | |
| China Power International Development Ltd ($2380) | 6.0x | 5.1x | 3.8x | 5.4x | |
| HK Electric Investments & HK Electric Investments Ltd ($2638) | 1.3x | 5.8x | 5.1x | 4.9x | |
| China Resources Power Holdings Co Ltd ($836) | 3.7x | 3.9x | 2.7x | 3.4x | |
| |
|---|
| Median (6 companies) | 5.6x | 5.1x | 5.2x | 5.1x | 2.0x |
|---|
