China Longyuan 2014 net profit jumps 24.7% y/y to CNY2.6b

Thanks partly to better wind power generation.

China Longyuan Power recently announced its 2014 results, with net profit up 24.7% y-y to CNY2,558mn.

According to a research note from Nomura, stripping out the one-off items, such as disposal gains/losses FX and fair value adjustments, impairments, etc., recurring net profit rose 7.9% y-y to CNY2,615mn, beat consensus and Nomura's estimates by 8.3% and 11.3%, respectively.

Nomura believes this was mainly due to the higher-than-Nomura assumed wind power tariff as well as better net wind power generation than Nomura's expectation.

The company proposed a final DPS of CNY0.0597, up 25.7% y-y, implying a pay-out ratio of 18.8% vs 18.6% in 2013.

Here's more from Nomura:

Key numbers for the 2014 results - Revenues excl. SCC revenues dropped 2.7% y-y to CNY17,980mn, due to 18.2% decline in revenues of coal power segment amid 13.3% drop in coal-fired power output, 2.0% coal-fired on-grid tariff cut and 20.7% drop in sales of coal due to lower coal sales volume and selling price.

This was partially offset by an 8.1% revenue growth in the wind power segment amid a 5.3% wind power generation growth.

Coal consumption cost was down 21.8% y-y owing to a 12.9% drop in coal-fired power output and 10.7% decline in standard coal procurement price. Coal sales costs also slumped by 21.4% y-y along with the plunge of coal sales revenue.

In line with the management’s guidance during interim results briefing, repair and maintenance (R&M) expenses showed a 13.7% y-y drop in 2014, thanks to the 16.9% drop in wind R&M cost, since the company launched innovative control mechanism with such costs under a wholeprocess closed-loop management.

With the effective cost control exercise carrying out as SOE, Longyuan’s administrative cost decreased 5.2% despite of 11.5% capacity growth. 

In 2014, the company incurred capex of CNY13.6bn vs. CNY11.5bn in 2013, among which the wind power investment accounted for 95.7% at CNY13.0bn.