NPAT increased 66% YoY, meanwhile.
Huaneng Renewable reported 2015 EPS of Rmb0.19, +54% YoY, above Jefferies' and consensus estimates.
According to a research note from Jefferies, 2015 NPAT increased by 66% YoY, compared to the more than 50% increase disclosed in the company's previous positive profit alert.
The better than expected results was low quality though as it was largely attributable to higher than expected other net income and lower net finance expenses.
Here's more from Jefferies:
Wind and solar installed capacity reached 9.72GW and 625MW, respectively. Of the company's 2.19GW of new wind capacity, more than 60% was in highly curtailed provinces such as Inner Mongolia, Northeast China and Xinjiang though. The company did add 299MW in Yunnan in 2015.
2015 Revenues increased by 20% YoY to Rmb7.36bn as the company benefitted from the 21% increase in gross power generation. Utilization hours were flat YoY at 1,882 hours.
Other net income increased by 159% YoY to Rmb435m as the company benefitted from Rmb243m in penalty income from suppliers and constructors. Other net income more than tripled in the second half compared to the first half.
Operating profit increased by 23% YoY to Rmb4.1bn and margins expanded by ~160bps to 56%.
Meanwhile net finance expenses increased by just 2% YoY to Rmb2.2bn. We estimate the company's effective interest rate fell by 50bps to 5.7%. Net gearing remains elevated at 241%, vs. 221% and 215% at the end of June 2015 and Dec 2014, respectively.
We expect the company's balance sheet will be under more pressure in 2016 as the company continues its capacity expansion plans. Finance income reached Rmb179m as the company recognized Rmb118m in foreign exchange gains.
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