Monday, November 30, 2020
 
Columnist
Martin Hennecke
 
HUADIAN FUXIN
HKEx Stock Code : 00816 
 
Corporate Profile
The Group is a leading diversified clean energy company in China, primarily engaging in the development, management and operation of hydropower projects and coal-fired power plants in Fujian province and wind power and other clean energy projects throughout China.

Business Review - For the year ended December 31, 2012

Our Group strives to achieve scientific development in line with our development strategies. Our first priority is to diversify our business by strengthening the leading role of wind power development on one hand and the supporting role of distributed energy and solar power generation on the other hand. By focusing on new energies such as biomass, small scale hydro power and coalbed methane, we pursue for the diversification of our business in an effort to better adapt to the changes in natural resources and external policies, so as to enhance our risk-resistance capabilities. Our second priority is scale expansion under a value-for-money approach. Conditional on achieving reasonable profit, we strives to achieve scale expansion and rationalization of projects. Thirdly, we worked towards cooperation and seek for synergies between upstream and downstream enterprises. We have enhanced our alliance relationship along the supply chain from suppliers of wind power equipment, battery components and natural gas, to users of cold and heat generation to achieve a win-win situation. Fourthly, we strives to achieve differentiation development, by working on the development of technically advanced and risk-controllable new energy projects. We prudently develop certain start-up new energy projects, which in turn are attached to uncertainties, while optimizing our industrial structure in a bid to improve the competitiveness of the Company.

In 2012, by leveraging on the Group's advantage of ¡§mixed portfolio of hydropower and coal-fired power¡¨, the Group strengthened its production and operation through better management. The Group strived to expand its sources of revenue, reinforce cost control and improve the Group's core competitiveness and profitability by increasing power generation, raising tariff and controlling coal price. Our hydropower, wind power, coal-fired power and other clean energy segments were profitable and our overall results had recorded a significant growth as compared with the previous year.

In 2012, profit attributable to equity owners of the Company was RMB1,040.5 million, representing an increase of 83.9% over the previous year; consolidated installed capacity was 7,898.9 MW, representing an increase of 21.1% over the previous year; gross generation was 23,892,049.4 MWh, representing an increase of 37.9% over the previous year.

1. Hydropower business

As at 31 December 2012, the Group had a consolidated hydropower installed capacity of 2,223.4 MW and a capacity under construction of 80.0 MW. In 2012, the gross hydropower generation of our Group was 9,038,437.6 MWh, representing an increase of 57.7% over the previous year. With our centralized sales and operation, we have obtained a significant breakthrough in tariff. The average on-grid tariff (tax exclusive) was RMB275.3/MWh, representing an increase of RMB18.5/MWh or 7.2% over the previous year, a total of 29 hydropower projects were approved for increasing tariff in March 2012.

The Company took advantage of the favorable opportunities brought by the higher level of precipitation for the year, leveraged on our edges in the forecasting system and key reservoirs and further tap on the potential of our comprehensive river dispatch in full, further enhancing the utilization rate of hydropower. In 2012, the accumulated levels of precipitation of the seven key reservoirs amounted to 2,120.0 mm, which was 22.0% above the par, and was 59.0% above that of the previous year. The average hydropower utilization hours were 4,065 hours, which rose by 57.4% over the 2,583 hours in the previous year.

2. Wind power business

As at 31 December 2012, the Group had a consolidated wind power installed capacity of 2,716.8 MW, representing an increase of 25.1% over 31 December 2011, and a wind power capacity under construction of 801.5 MW. In 2012, the gross wind power generation of our Group was 4,302,678.9MWh, representing an increase of 38.6% over the previous year. The average on-grid tariff (tax exclusive) was RMB483.5/ MWh, representing an increase of RMB0.96/MWh over the previous year. The average wind power utilization hours were 1,923 hours, which was slightly lower than the previous year, mainly due to changes in wind resources in some areas, grid transmission limitations and distribution of electricity resources.

In 2012, the Group continued to optimize the structure of wind power projects with a focus on quality development, and the pipeline capacity increased to 43,509.7 MW, of which, advanced pipeline projects and intermediate pipeline projects amounted to 1,371.5 MW and 1,945.5 MW, respectively. During project construction, the Group proactively fostered the optimization of design, utilized first-class domestic and international equipments with reasonable prices and high quality and controlled the project costs within a reasonable range. We promoted standardized maintenance operations and enhanced soundness of the equipments. Thus, the availability coefficient of wind turbines increased to 97.8% and the operational maintenance costs remained at a relatively low level. The Group proactively propelled the advancement and innovation of wind power technologies to reassure its leading position in the industry, and several national and industrial standards undertaken by the Group were completed and approved successively.

3. Coal-fired power business

As at 31 December 2012, the Group had a consolidated installed coal-fired power capacity of 2,650.0 MW, representing an increase of 29.3% as compared with 31 December 2011. In 2012, the gross coal-fired power generation of our Group was 9,765,482.0 MWh, representing an increase of 21.4% over the previous year. The average on-grid tariff (tax exclusive) was RMB380.3/MWh, representing an increase of RMB16.3/MWh or 4.5% over the previous year, mainly because Kemen Power Plant and Fujian Huadian Shaowu Power Generation Company Limited increased tariff (tax exclusive) by RMB23.4/MWh and Fujian Huadian Zhangping Coal-fired Power Co., Ltd. and Fujian Huadian Yong'an Power Generation Company Limited increased tariff (tax exclusive) by RMB36.2/MWh in December 2011.

While the demand in electricity was declining in 2012, the Company proactively implemented marketing initiatives for sales of electricity and, at the same time, strengthened the operation management of our equipments, to achieve higher power generation output. In 2012, Kemen Power Plant maintained the best average utilization hours among the same type of generation units of its peers in Fujian province, and reported an average standard coal consumption of 302.1 kg/MWh, representing a decrease of 2.1 kg/MWh over the previous year.

4. Distributed energy and other clean energy projects

Leveraging on our experience and advantages obtained from the development of the Guangzhou University Town project, we have acquired a considerable number of quality pipeline projects in distributed energy sector for future development. As at 31 December 2012, the consolidated installed capacity commenced operation and the consolidated installed capacity under construction of the distributed energy projects of the Group amounted to 156.0 MW and 207.0 MW respectively; the capacity of advanced pipeline projects, intermediate pipeline projects and early pipeline projects were 488.0 MW, 1,582.0 MW and 5,549.0 MW, respectively.

As at 31 December 2012, we also held 39.0% equity interests in four 1,000.0 MW nuclear power generating units under construction.

As at 31 December 2012, the solar power projects of the Group had a consolidated installed capacity of 127.4 MW, with a consolidated installed capacity under construction of 100.0 MW.

Business Outlook - For the year ended December 31, 2012

Looking into 2013, amid uncertainties in global economy, economic growth in China will remain reasonable and steady, with further room for growth of demand in electricity. As the most commercially mature clean energies, there is ample room for the wind power, solar photovoltaic power and natural gas distributed energy businesses to develop. As Huadian's sole and ultimate integrated platform of clean energy business, the Group will continue to develop various types of synergistic and complementary clean energy to implement our diversified clean energy development approach. We will benefit from more development opportunities arose in the future to provide the highest return to our shareholders.

1. Hydropower business

With over 50 years of operation and our leading position in the hydro power sector in eastern China region, we intend to further expand our hydropower business by external acquisition as well as renovation and expansion of existing projects. By leveraging on our Group's advantage in key reservoirs, strengthening the river dispatch, increasing power generation and actively requesting for tariff increase, the Group can further improve the profitability of our hydropower business. It is expected that generation unit expansion projects of 80 MW will commence operation in 2013, and an additional of 110 MW of renovation and expansion projects will commence construction in the same year.

2. Wind power business

The Group will continue to uphold the principals of value creation in tandem with steady development to pursue for effective development in scale. With reference to market conditions, resources, market absorption, annual utilization hours and policy, implementation, we will prioritize our development and investment in wind power business in the order of prioritized development, rational development and prudent development. We will optimize the development approach of wind power business, rationalize the planning of wind power business deployment, strive to improve operating results and actively enrich our wind resource reserves.

3. Coal-fired power business

As a traditional way of power generation that is irreplaceable in the near future, the Group's coal-fired power business provides a significant source of revenue and cash flow to support the development of the Group's clean energy. The Group has two generating units with an aggregate capacity of 600 MW which had completed and commenced operation by the end of 2012. It is anticipated that the acquisition of two generation units from Kemen II with an aggregated capacity of 1,200 MW will be completed in 2013.

4. Other clean energy businesses

Focusing in the development of new energies and renewable energies as well as increasing the proportion of non-fuel power generating units will remain an important development direction of the energy industry in China. In 2012, both the National Energy Administration and the State Grid Corporation of China had issued relevant policy circular to encourage the development and construction of solar photovoltaic power project. The 12th five-year plan for Energy Development and the Natural Gas Utilization Policy issued by the National Development and Reform Commission of the PRC provided a guarantee for the development of natural gas distributed energy.

The Group believes that by operating such clean energy projects, we will diversify the source of revenue and bring the Group a new prospect for business growth. The Group will step up our efforts in development of natural gas distributed energy and solar photovoltaic power projects with our first-mover advantages and will place emphasis on the study of industry development, market trends and regulatory policies of nuclear and biomass projects, and selectively pursues opportunities to expand into other clean energy businesses.

Source: Huadian Fuxin Energy (00816) Annual Results Announcement
Chairman Fang Zheng Issued Capital (shares) 1,785M
Par Value RMB 1 Market Capitalisation (HKD) 4,230M
 
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