China's Huadian Fuxin poised to achieve 1.5GW capacity additions in 2014

Most capacity to be in traditional regions.

Huadian Fuxin is confident of achieving 1.5GW capacity additions in 2014, with around 60-70 percent capacity to be located in the traditional regions (such as northern China).

According to a research note from Nomura, the company also company managed to achieve 20 percent wind power output growth in 5M14, given the capacity growth by end-2013.

Meanwhile, the report also noted that Huadian Fuxin's coal-fired power generation should see significant y-y growth (eg,April +20% y-y), whereas unit fuel costs are likely to fall 10 percent y-y, above Nomura's assumption of a 5 percent drop.

Here's more from Nomura:

Hydropower: YTD water flow in Fujian has been better than the same period last year, which benefits the company’s hydropower output. For the capacity addition perspective, the 150-200MW guidance is on track through both expansion of existing projects and acquisition.

Nuclear power: We note some investors’ concerns about the commissioning of the nuclear power project. Per the company, unit #1 of the Fuqing nuclear project will be commissioned in July (in line with expectations) and will then go through a 3-month trial operation period.

In line with other nuclear power projects under trial, the temporary on-grid tariff is 80% of the national benchmark tariff of CNY0.43/kWh. For Units #5-6, per www.china5e.com, China National Nuclear Power Co. recently performed preliminary preparatory work for the units.

As such, we may expect to see the Units #5-6 receive final government approval on construction in the near future, which should act as a share price driver.