Power giant back in the good books
Huaneng Power International, the listed unit of the mainland's largest power producer, China Huaneng, returned to the black in the first quarter, thanks to a 6.7 per cent rise in the average price of power in December last year.
The firm posted a fourfold year-on-year jump in net profit to 919.36 million yuan (HK$1.13 billion) in the first quarter, up from 226.3 million yuan in the year-earlier period. It is a turnaround from a 230 million yuan loss in the fourth quarter, when its bottom line was hit by Beijing's tight control on power prices amid rising fuel costs.
Huaneng last month said it aimed to control coal cost per unit of power sales to within 3 per cent this year, after a 9 per cent rise last year.
After falling about 10 per cent from a high of 850 yuan a tonne in November last year to 770 yuan in February, the benchmark spot market power-station coal price in Qinhuangdao - the country's largest coal port - has rebounded 2 per cent. Coal typically accounts for 70 per cent of a mainland power plant's operating cost.
Rival Huadian Power International also had better fortunes, thanks to December's tariff rise, posting a first-quarter net profit of 200.9 million yuan, compared with a loss of 265 million yuan in the year-earlier quarter.
Mainland power plants last year suffered from widespread losses because of Beijing's failure to raise power prices fast enough to offset higher coal costs, as part of efforts to combat inflation. Coal-fired power plants generate 82 per cent of the mainland's power output.
Meanwhile, power generation equipment maker Dongfang Electric reported a 20.6 per cent year-on-year rise in net profit to 74.68 million yuan.
Revenue grew 12.2 per cent to 9.63 billion yuan despite the capacity of the equipment produced falling 20.7 per cent to 8.35 gigawatts, as it produced more products that commanded higher prices.
Gross profit margin remained steady at 20 per cent.
The firm received 8.5 billion yuan of new orders in the first quarter, of which 12 per cent was for exports. New orders received in the same quarter last year amounted to 9 billion yuan.
A Daiwa Securities research report said mainland power generation equipment makers were likely to receive more orders after the second quarter since Beijing was expected to resume approving new nuclear projects in the next few months after conducting safety reviews. It was also expected to sanction more coal-fired plants from the third quarter after it released the development plan for the power industry for the five years to 2015.
Separately, Xinjiang Goldwind Science & Technology, the nation's second-largest wind power turbine maker, saw first-quarter net profit plunge 97 per cent to 6.18 million yuan as revenues slid 8.4 per cent to 1.7 billion yuan.
Gross profit margin dropped to 11 per cent from 22 per cent.
The company attributed the profit fall to lower selling prices for turbines amid keen competition and higher administration and financing costs.
Coal typically accounts for this much of a mainland power plant's total operating costs