Huaneng Renewable's 2014 recurring profit slightly drops 3% to CNY1.04b

Will capacity expansion boost this?

Huaneng RE announced its 2014 results, with net profit at CNY1,121mn, an increase of 22.8% y-y.

According to a research note from Nomura, further, stripping out the one-off items, the 2014 recurring net profit of CNY1,041mn showed a slight decline from 2013 by 3%, but in line with consensus (CNY1,086mn) and Barclays' estimate of CNY1,074mn.

Further, the company proposed a final DPS of CNY0.02, in line with the prior year.

Nomura noted that it remains positive on Huaneng RE given the strong capacity expansion and potential wind speed recovery.

Here's more from Nomura:

Although the 2014 recurring net profit recorded a slight decline vs. 2013, such results were expected by the market amid the weak wind speed in 2014.

Heading to 2015F, we continue to maintain our positive stance on the company given: 1) its strongest capacity growth among peers, with our expected 2015F wind power capacity addition of 1.8GW (at 22% growth vs.
only mid-teens for peers); 2) high earnings sensitivity to the likely recovery in wind speed in 2015 (with 2014 being the exceptional year for weak wind speed); and 3) further interest rate cuts in 2015, per our China economist.

Despite the lower-than-guidance wind power capacity addition of 1.3GW in 2014 (vs. previous guidance of 1.8GW), we believe this has been wellacknowledged by the market and should not cause a surprise. The company will hold its 2014 results briefing at 3PM HKT on 19 March 2015. We will return with more details after the briefing.