Some hydropower companies foresee significant turning point or in the third quarter

The listing of listed companies’ first-half results in the first half of 2012 has gradually entered a countdown period. From the perspective of many hydropower companies that have issued performance forecasts, the profitability of hydropower in the first half of the year was not satisfactory. In this regard, industry sources said that with the advent of the second half of the rain season, hydropower companies may usher in the turning point in the third quarter.

Recently, Xichang Power (7.81,0.23,3.03%) (600505.SH), Wuyuan Power (15.95,0.00,0.00%) (002039.SZ), and Guodian South (7.19,-0.08,-1.10%) (600268 SH), Star Power (9.58, 0.04, 0.42%) (600101.SH) and National Power Nanrui (15.50, -0.08, -0.51%) (600406.SH), Sichuan Investment Energy (6.25, 0.11, 1.79%) More than a dozen listed hydropower companies such as (SHX) and Guiguan Power (3.75, 0.02, 0.54%) (600236. SH) issued interim results announcements. Of which, the net profit of Minjiang hydropower (5.94,0.00,0.00%) (600131.SH), Fuling power (7.73,-0.08,-1.02%) (600452.SH) and Hunan Development (000722.SZ) are expected to increase by more than 60. %, the maximum pre-increase in Fuling power even reached 147.14%. However, the rest of the companies reported collectively, among which Xichang Power and Wuyuan Power even suffered the first loss.

Wuyuan Power disclosed the revised first-half performance report for the first half of 2012 on July 4. Although it had significantly reduced losses compared to the previous forecast, it was expected that the net profit attributable to the parent company would have fallen by 23 million yuan to 28 million yuan, down by 250% from the same period last year. 280%. The day before, Xichang Electric estimated that the company’s loss for the first half of the year was about 25 million yuan, a decrease of about 119% year-on-year.

In addition, Guodian Nanzi and State Power Nanrui expect that the net profit attributable to shareholders of listed companies from January to June 2012 will fall by more than 50%; Star Power expects to reduce its net profit by 60%; Chuantou Energy expects its net profit to decrease by 39.72% year-on-year.

The majority of companies attributed the main reasons for the loss to performance in the first half of the year due to the arid climate, reduced self-generated power and decreased demand for social power.

In response, Zhou Xiujie, a researcher in the energy industry of China Investment Advisors, told the First Financial Daily (microblogging) that on the one hand, the first half of the year was the traditional off-season of hydropower generation. “Awkward women can hardly be free of rice,” and hydropower companies can hardly make a difference; On the one hand, the demand for electricity is not very strong, and there is a serious surplus in thermal power production capacity, and there is little room for development of hydropower.

The overall performance of the hydropower industry has not performed well since 2011 due to the dry weather and the drought in some areas. However, since May of this year, water supply has been abundant in most parts of the country, so the market is full of imagination for the performance of hydropower listed companies. However, one or two months of high boom has limited impact on the annual performance of hydropower listed companies.

Zhong Xuezhi, a researcher in the energy industry at China Investment Advisors Co., Ltd., said that despite the increase in water supply in the past two months, the water supply situation in the first quarter was not good. At the same time, the economic growth slowed down, the manufacturing industry slumped, and high energy consumption such as steel, petroleum, and non-ferrous metals. The demand for electricity in the industrial sector has fallen sharply, and power supply and sales of power products have fallen significantly, which has dragged down the performance of the hydropower industry in the first half of the year.

“The rains all year round were concentrated from June to October. Therefore, the best period for observing the annual performance is in the third quarter.” However, Zhou Xiujie also stated that “China’s economic recovery has slowed down, and there has been a serious backlog in coal, coal and electricity companies. The situation of oversupply of electricity can hardly be effectively alleviated in the short term. Hydropower companies will usher in the peak of performance growth in the third quarter, but it is difficult to fundamentally reverse the trend."