Huaneng Power Shares Fall on Earnings Miss

Dow Jones07-31

By Jiahui Huang

Shares of Huaneng Power International dropped after quarterly earnings missed market forecasts, hurt by lower electricity prices and more intensified renewables competition.

The Chinese electricity producer's Hong Kong-listed shares fell 6.7% by midday Wednesday, while its Shanghai shares dropped 4.5%, among the top decliners on the CSI 300 Index.

Huaneng late Tuesday released first-half financial results that indicated a double-digit percentage drop in both profit and revenue in the second quarter. Its total on-grid electricity sold by power plants in China slipped 6.2% from a year earlier.

Huaneng cited, in part, maintenance of plants ahead of the summer season, partly offset by higher power generation from renewables in the first half of the year.

Analysts weren't impressed, highlighting lower electricity prices and an uptick in operating costs. Both Daiwa and Citi analysts said net profit and revenue came in well below expectations.

Citi analysts Pierre Lau and Bella Tian reiterated a sell rating, flagging, among other things, higher operating costs in the second quarter. They forecast that the second half's profit gain would be less than in the first half, adding that the full-year consensus profit projection "is likely to be cut as Huaneng often have large impairment loss" in the fourth quarter.

Daiwa analysts Dennis Ip and Neal Du in a note said they are concerned that declining renewable tariffs and rising curtailment will further pressure the independent power producer's earnings growth. Daiwa has a hold rating on shares.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

July 31, 2024 00:30 ET (04:30 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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