CGN Power's power generation sharply shot up by 32% to 27.1b kWh

4 units are to be commissioned near-term.

According to Barclays, CGN Power's reported EPS for 3Q of RMBc4.3 was in line with their estimate even though underlying operating profit beat our number by 44%, as earnings were tempered by a forex loss in the quarter.

Lower than expected costs drove the strong underlying results, as did strong power generation, up 32% q/q. The ramp up of associate plants Ningde and Hongyanhe were key drivers in addition to strong generation from Daya Bay following the maintenance shutdown in the previous quarter. 

Here's more from Barclays:

Operating cash flow improved in the quarter with a 165% sequential increase and beat our estimate by 72%. The strong pipeline of nuclear power plant commissioning in the next 6-12 months is likely to keep earnings momentum intact, while the government’s push for accelerated construction of nuclear plants is likely to result in faster project approvals.

Revenues were up 5% compared to our estimates, while operating profit of RMB3.4bn was 44% ahead of our estimates and increased 53% q/q. Lower costs (both operating cash costs and SG&A) were key drivers for the stronger profitability.

However, this was offset by finance costs of RMB1.9bn, while we had expected only RMB0.3bn, which we suspect was driven by a reversal of a RMB1.3bn forex gain recorded in 1H15. 

Net generation of 27.1bn kWh was up 32% q/q. CGN is scheduled to commission unit 2 at Yangjiang, unit 3 at Ningde and units 3 & 4 at Hongyanhe, which should support strong power generation in the next 6-12 months.

The government’s push for the nuclear sector in the 13FYP is also likely to accelerate project approvals. China is targeting construction of 6-8 units per year (up from 3-5 units earlier) and has allocated RMB500bn to fund domestically developed reactors. A long-term target of 110 reactors in China by 2030 implies a strong project pipeline.