Falling fuel cost lifts hopes for China Resources Power
Electricity firm income jumps 68 per cent after power price rises to beat forecasts
China Resources Power expects this year's fuel cost per unit of output to fall at least 5 per cent while electricity price will be stable, which will bode well for its profitability.
The electricity arm of state-backed China Resources (Holdings) yesterday posted a net profit of HK$7.48 billion for last year, up 68 per cent from 2011 and 7.8 per cent higher than the HK$6.93 billion average estimate of 25 analysts polled by Thomson Reuters.
Excluding foreign-exchange gains or losses, underlying profit surged 129 per cent, CR Power said.
The profit growth was mainly due to a 9.3 per cent fall in fuel cost per unit of output and a 5.1 per cent rise in average power selling price.
Overall output was flat as the commissioning of new plants offset a 7 per cent drop in same-plant generation due to the country's weaker industrial output and higher output by hydro plants amid more-than-normal rainfall. About 92 per cent of its generation capacity is coal-fired.
President Wang Yujun said the 5 per cent decline in fuel cost was a preliminary estimate based on the assumption that this year's average coal price would be similar to the level in the second half of last year.
The China Electricity Council has forecast the country's power consumption would rise 7 to 9 per cent this year, up from 5.5 per cent last year.
CR Power's profits could also be boosted by its target to raise coal output to 20 million tonnes this year. Last year's output grew 1.8 per cent to 16.8 million tonnes.
The firm aims to raise equity-calculated generation capacity by 12 per cent to 28.3 gigawatts by the end of the year.
Gong Qingchao, the executive director of the coal sales centre at China Coal Energy, also expected coal price to be soft this year owing to rising domestic output and imports. To counter the impact on profits, the firm aims to raise raw coal output this year by at least 5 per cent and keep the rise in production cost per tonne of output to within 5 per cent.
Executive director Peng Yi said China Coal had not changed its target to produce 200 million tonnes in 2015, which represents annual average growth of 11.3 per cent from last year's level.