China Power International's recurring profit jumps 68.1% to CNY 2.8b

Upcoming capacity growth could be relatively strong.

China Power International (CPID) announced its 2014 results after the market close on 18 March, with net profit up 20.8% y-y to CNY 2,766mn.

According to a research note from Nomura, stripping out the one-off items (i.e., provisions, disposal gain/loss, VAT refund, FX adjustments, etc.), recurring net profit was up 68.1% y-y to CNY 2,837mn.

Nomura noted that this is in line with consensus (CNY 2,786mn) and its estimates (CNY 2,848mn). The company proposed a final DPS of CNY 0.17, up 5% y-y.

Here’s more from Nomura:

Key numbers from the 2014 results - Revenue increased 8.6% y-y to CNY 20,447mn, thanks to: 1) 36.0% y-y growth in the hydropower business, driven by a 31.1% increase in the net hydropower output; and 2) a 3.3% y-y increase in the coal-fired power business given 5.2% net power generation growth.

Fuel cost dropped 11.8% y-y in 2014, mainly due to the 16.2% reduction in unit fuel cost amid weak coal prices, but this was partially offset by a 4.5% increase in gross coal-fired power generation.

Other major costs such as staff costs, repair and maintenance, and financial costs recorded 29.2%/23.4%/37.4% y-y growth, respectively, mainly due to an increase in the number of projects.

Share of profits of associates and JCEs jointly increased 45% y-y, thanks to the commissioning of Changshu Power and Xintang Power.

Effective tax rate dropped 7.3% y-y owing to the investment tax credit granted and utilised in 2014, which offset CNY 79mn in income taxes.

Net gearing ratio improved 36ppt to 203% at end-2014 vs. 239% at end-2013, thanks to the continuous improvement in profitability.