China Power International optimistic on 2H14 hydropower generation prospects

Even if generation declined during 1H14.

Despite the 1.6 y-y decline in hydropower generation during 1H14, the management of China Power International (CPID) is positive on the 2H14 hydropower generation.

According to a research note from Nomura, generally, the peak season for rainfall and in turn the hydropower generation starts in April.

However, per the company, the rainfall and the hydropower generation started relatively late in 2014, delayed by around one-month.

Here's more from Nomura:

As such, the peak hydropower generation only started in May 2014, and resulted in a small decline in 1H14.

Per the management, with July 2014 hydropower generation higher than July 2013 by 4 times, the 7M14 hydropower generation is better than the prior year's period.

Overall, they are confident to maintain their 2014F hydropower generation guidance of 14.7bn kWh, in line with our forecast of 14.8bn kWh.