HUNGF (HUNGF) Q3 2026 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen. On behalf of Huaneng Power International Inc, I would like to welcome you all to the conference call regarding the third quarter results announcement of 2026. [Non-English content] Now, may I introduce the management of the company today. [Non-English content] The Chairman of the company, Mr. Wang Kui. [Non-English content]

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[Non-English content] The Independent Director of the company, Ms. Dang Ying. [Non-English content]

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[Non-English content] The Chief Accountant and Board Secretary of the company, Mr. Wen Minggang. [Non-English content]

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[Non-English content] People in charge of the related departments are also joining us in this meeting. First of all, the Chairman of the company, Mr. Wang Kui, will review the business performances for the third quarter results of 2026, followed by the Q&A session. May we have the honor to invite Mr. Wang to review the business performances and Mr. Li Guoyun to conduct the English interpretation.

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Ladies and gentlemen, welcome to the third quarter results conference of Huaneng Power International.

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We have announced the operating results for the third quarter of 2026 yesterday, and now I'd like to give you a brief introduction.

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In the third quarter of this year, with annual development guidelines in mind, the company successfully tackled those challenges ahead proactively based on the scientific outlook of the market horizon. By the end of the third quarter, we have achieved tangible outcomes in meeting key targets of the year. Both our business operation home and abroad, as well as development transformation, have shown improvements.

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Calculating under IFRS, by the end of September, the company has realized a consolidated operating revenue of CNY 165.85 billion, decreasing by 4.12% year-on-year. The net profit attributable to the company's shareholders scaled CNY 7.82 billion, decreasing by 47.29% yearly, and the earnings per share of the company by the end of the third quarter was CNY 0.39.

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In terms of power production, the company has taken every effort to promote the green and low carbon transformation. The installed capacity of wind turbine and PV modules have shown a consistent growth, but the company's on-grid power sales have shown a yearly decrease as renewables and hydro sector has delivered a larger production and the market share of our coal-fired unit has decreased.

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By the end of September, we have sold 312.9 billion kilowatt electricity to the grid of mainland China, decreasing by 5.6%. The average tariff was CNY 467.63/ MWh, which has witnessed a year-on-year decrease of 2.32%.

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In terms of coal cost controlling, the company tightly focused on the fuel market dynamics, swiftly adjusted our coal procurement plans, improved the fulfillment of mid and long-term contracts, delivered a better strategy for spot market procurement while leveling up the inventory management.

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By the end of the third quarter, our plants at home have realized the standard coal price of CNY 933.55 per ton, year-on-year growth of 4.62%.

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In terms of development transformation, the company upholding the strategic guidelines of low carbon development, actively saving market opportunities, highlighting both quantity and quality. We delivered every effort to promote the infrastructure construction.

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From the beginning of this year to the end of September, we have newly added 5.16 GW of installed capacity, including 3.93 GW of wind and solar, 1.23 GW of gas-fired, and the total installed capacity under control of the company has scaled 160 GW. Low carbon emission clean energy now takes 42.92%.

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In terms of business overseas, we carefully and tightly focus on the trends of Singaporean electricity market, ensure the stable supply of fuel, and timely optimize the strategy to the market, as well as enhance the control of cost. This year, by the end of September, Tuas Power has realized an earning before interest and taxes of CNY 1.12 billion. Sahiwal plant in Pakistan also delivered the desired operating results. The EBIT scaled CNY 711 million.

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Going forward to the fourth quarter of this year, the company will tightly focus on the set goal for 2026 and improve our research and analyzation towards the power, demand and supply, delivering a feasible guide on signing the mid and long term electricity contracts. We will also better balance the price and production, improve our efficiency.

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To the fuel purchase, we will tightly follow the fluctuation and trends of fuel markets and better control our coal cost via multiple channels, optimizing our fuel supply structure and being well prepared for the mid and long-term contract signing for the coming 2027.

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The company will anchor the development goal, upholding the strategic leadership. We will improve the operating quality and efficiency and try the best to accomplish the annual goal of 2026. Embarking on a new journey for high quality development in the 15th Five-Year Plan period.

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My colleagues and I are willing to take your questions. Thank you.

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I do have three questions. The first two questions go to the tariff. The first is what is the tariff nationwide in China in the first quarter alone? What is the price of the company's tariff and broken down by yearly contract and those settled on the spot market? The second question goes to that, as we all know that the coal price has soared and surged during this year, and the market expects that the proportion of the long-term contract to settled power will be increased in the coming next year. What is the guideline, or what is the expectation of the company towards the signing of mid and long term contract, and what about its tariff? The third question goes to the tariff broken down by different energy types. The first one is from January to September. What is about the tariff broken down by different energy types in quarter three alone? Thank you.

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Now I'd like to answer a question towards the tariff of the on-grid power sales. In the third quarter, coal-fired has scaled an on-grid power tariff of CNY 465/MWh.

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In the third quarter, the coal-fired units have about 60% of the yearly contract in the total signed mid and long-term contracts.

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In terms of the long term contract signing price, as the market and the company has highly emphasized or highlighting the signing of the mid and long-term contract, especially those that settled yearly. In the year of 2026, we have saw a series of changes, such as the marketization of all the powers and also some major adjustments in our power generation industry. So we also expecting the signing of the mid and long-term contracts in 2027. Towards the company, we have three factors that will affect the settlement price in the coming next year. The first one is as we know that the NDRC of China has delivered some guideline on signing mid and long-term contracts in the coming next year. The policy guideline is the first important factor, and second is the fuel cost. Now we have saw that this year there is a surge in gas price and coal price, as well as the geopolitical conflicts has also affect the fuel cost. The third factor is the settlement strategy of the company, and that is also delivers the final settlement price of the year of 2027. Our sub-branch in different municipalities are delivering communications with the government and our clients right now to improve the proportion and the price of signing price of the mid and long-term contracts in next year. We believe that there will be a slightly improve in the tariff at the signing price in the year of 2027. Under the guideline of the policies and the fuel markets landscape, we will see a rebound, I think. Thank you.

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Towards the EBIT of different energy types broken down, the coal-fired plants of the company has earned CNY 931 million in the first quarter. Gas fire CNY 237 million, wind power sector CNY 1.22 billion and PV sector CNY 1.13 billion. The biomass has made a loss of CNY 12 million. Thank you.

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From January to September, the accumulated profit of different energy types are as follows: The coal-fired units has made a profit of CNY 6.85 billion, gas-fired CNY 1.21 billion, wind power turbine CNY 4.18 billion and PV sector CNY 2.35 billion. Hydropower CNY 114 million and biomass has made a loss of CNY 30 million.

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The management has mentioned that in the first quarter alone, the on-grid power tariff was CNY 465/MWh. What about the yearly contract?

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In the first quarter alone, the tariff of on-grid power sales of coal-fired units is about CNY 418/MWh.

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Those contracts are signed yearly. The coal-fired unit has made the tariff of CNY 367/MWh.

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What about the tariff that settled on the market?

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In the first quarter, the medium long-term contract, including the yearly signed contract and monthly quarterly signed contract, the total budget is about CNY 382/MWh. After the market based transaction, the total budget is about CNY 418/MWh.

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I have two questions. The first question goes that as this year the coal price on the market has seen a surge that has also delivered the pressure towards the company's performance. I wonder what about the dividends payout ratio of the company? Will our company keep a stable dividends payout ratio per share and in total? The second question goes to the expectation in the mid and late periods of 15th Five-Year Plan. What does the company expect the supply and demand relation nationwide in this period? Will the power supply turn to tightened from comparatively loose state? We have seen that the tariff of the spot market in coastal areas of China has seen a surge. What is the expectation in this area excluded the factor the coal price is rising? Are there other factors that improve the tariff in the coastal areas?

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I would like to answer a question about the dividends payout plan. The company is also highlighting the repay and share the profits with our shareholders. Our dividends payout plan will be made and will enter the consideration about our profitability as well as the business operation and sustainability.

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Company made our dividends payout plan based on the earnings per share. What you mentioned, the fixed dividends payout ratio is not our consideration.

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The society are commonly focusing on the demand and supply relation of the electricity. From January to September, as the analysts such as you have delivered the report, there is some characteristics. Now we have saw a surge in the agriculture and manufacturing industry, and the new rising industries have seen a slight increase.

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In the third quarter, we have seen a new characteristic that household power consumption has seen a yearly decrease, and that is mainly because that's the weather condition this year.

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Now for the entire power consumption this year, the consumption growth may be lower compared with the growth of the previous year in 2025. Now we anticipated that the growth of power consumption for the year of 2026 will be around 4%.

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Going to the next year in 2027, the national authorities haven't delivered the data or the expectations. But our anticipation of the power generators and installed capacity is growing rapidly and consistently. We believe that the demand and supply will be in the balance or compared to the loose state, I think. Thank you.

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Now I found that there is a spread comparing with the revenue broken down by different energy types and consolidated based revenue of the company. There is a gap of about CNY 3 billion even considering Tuas Power and the Pakistan program. What is the reason?

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Those revenues, including the thermal seller and electricity sellers expense, as well as the earning of investment and also the cost and fees of the headquarter of the company and other sectors. Thank you.

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I have three questions. My first question goes that we have seen even under the huge pressure of the upward trends of the coal price on the market, the coal-fired units of the company still made a profit about CNY 10/MWh, which is beyond our expectation. Besides this profitability, how many plants of the company in the first quarter has made a loss? What is the quarter-on-quarter change if there has been an increase of the numbers of the plants that made a loss. My second question goes to the tariff, on-grid tariff of coal-fired unit. What is the quarter-on-quarter change and year-on-year change, and what is the reason? What is about the tariff of the coal-fired units in the first quarter that broken down by capacity based compensation and tariff settled by the market? As the market based the tariff in first quarter has also made an improvement. My third question goes to the signing price of the coal long-term contract. What is the settlement price in the first quarter of the mid- and long-term contract call, and what is the price from the quarter one to quarter three in total? Thank you.

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About 43.7% of the coal-fired units in the company in the first quarter made a loss. We saw a quarter-on-quarter increase of about 10 percentage points.

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In the first quarter, we saw a tariff increase of the coal-fired units in the company, both year-on-year and quarter-on-quarter. The reason is in the first quarter, we had the peak season in summer, and although the annual growth compared with last year is still slightly smaller, we still had a comparatively tightened seasonal state in the first quarter, and that supported the coal-fired units tariff.

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The second reason is that the coal price on the international market and on the domestic market has shown an increase. The thermal coal supply is tightened as well. The increase of coal price has an access to pass through on the tariff.

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Towards the compensation based on the capacity. In the first quarter, we had a capacity-based compensation per megawatt hour of around CNY 44. In the second quarter, as we generated even less power, we had a comparatively higher capacity-based subsidy, which is around CNY 49/MWh.

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Towards the market based tariff of the coal-fired unit. In the first quarter alone, we have about CNY 418/MWh of tariff settled on the market. In the second quarter, CNY 392/ MWh.

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Since the beginning of 2026, taking the inspection in Shanxi Province of the security into our consideration, we have seen a rise in the long-term contract price as well as the limitation of those mines. So this year, we have also seen a rise in the spot market supported coal. So the suppliers of coal have not the will to fulfill the long-term contracts, and that is the common sense on the market. This year we have signed about the long-term contract, about 100 million tons, and the coverage ratio is about 80%.

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From the quarter one to quarter three, we have procured about 55.95 million tons of long-term contract coal. And we have a decrease about 12.6%.

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Aiming this high price of coal on the market as well as the long-term contract signing challenges, we are enhancing our communications towards the strategic suppliers and improve the fulfillment. Thank you.

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I want to know that in the third quarter alone and from the first quarter to the third quarter, what is the actual percentage of the long-term contract coal in our total coal consumption?

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January to September, mid and long-term contract takes about 43.8% of entire coal consumption.

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I have three questions. My first question goes to that how many coal-fired power plants have still made a profit in the third quarter of the year? What is the reason? My second question goes to that, what about the tariff of the coal-fired units in the coming next year? We have mentioned that the tariff of the coal-fired units in the coming next year, we have seen a rise. What about the renewables? My third question goes to that in wind and PV sectors, how many plants or farms have made a loss from quarter one to quarter three? Thank you.

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There are still many coal-fired units of our company has a profitability in the third quarter, including some outstanding plants in Shandong Province, Shanghai Municipality, Henan Province, Chongqing Municipality, Guangdong Province, and etc.

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Gas-fired units in Shanxi Province, Chongqing Municipality, and Guangdong Province, and et cetera regions has the profitability.

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The reason is mainly because the comprehensively those power plants have an acceptable margin contribution.

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This year marks the very first year that the Document No. 136 has been implemented, that the renewable sectors has joined the spot market at a full capacity and this is the first year. Nationwide, the renewable sectors in many power generation groups have seen this kind of horizon that the generation of the renewables and the revenue of the renewables has increased, but the profitability and efficiency haven't been improved. We delivered an analysis as well.

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Taking comprehensively from the data from many of other power generation groups and based on the policy trends, we believe that the tariff of the renewable sectors is now experiencing its bottom and we believe that it will see a rebound in the near future.

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Now, from the first quarter to the third quarter, 10.2% of our wind turbine has made a loss, and 7.7% of PV sectors have made a loss.

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I want to ask about in the conference of the first half performance in this year, we have mentioned that there are about 30% of the entire power of PV sector has made a loss, and now we have seen a huge optimization. I wonder what is the reason? Thank you.

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We can see the loss made by the PV sectors has improved quarter-on-quarter, and that is mainly because that in the third quarter of this year, PV sector has delivered a marginal contribution about CNY 148 million.

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That is because that we have seen a quarter-on-quarter increase in both its power generation as well as its tariff settled on the market.

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The average on-grid power tariff of the PV sectors in quarter three alone is about CNY 372.4/MWh.

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Which is about CNY 1.5/MWh increase quarter-on-quarter.

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The total power generation of PV sectors scaled 8.53 billion kWh.

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The quarter-on-quarter increase about 870 million kilowatt hour.

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I have three questions. The first question goes to the minority interest on our income statement. We have seen a proportion has been increased. What is the reason? Could you give us a broken down by different energy types, including the profit attributable to the parent shareholders as well as the net profit of the company? My second question goes to that, what about the profitability per megawatt hour of the company's wind power turbines in the third quarter? My third question goes to this year, what is the newly installed capacity plan for renewable sectors in this year? What about the plan for the coming next two years in 2027 and 2028? Thank you.

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Now firstly, I want to deliver the net profit broken down by different energy types in quarter three alone. The coal-fired units has made about CNY 662 million, gas-fired units CNY 203 million, wind power turbine CNY 886 million, and PV sector CNY 1.48 billion. The hydropower CNY 54 million and biomass CNY -12 million.

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Towards the profit attributable to the company's shareholders in quarter three alone, the coal-fired units has made about CNY 266 million, gas-fired unit CNY 166 million, wind power generators CNY 653 million, and PV sector CNY 956 million, hydropower CNY 52 million, and biomass CNY -8 million.

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Now the company has made a profit attributable to the shareholders in the third quarter, which is about CNY 1.23 billion. The minority interest takes about CNY 899 million. The proportion is about 42.11%.

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In the third quarter, we have seen a quarter-on-quarter decrease in net profit scales of CNY 680 million, and the profit attributable to the company's shareholders has decreased by CNY 860 million.

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The minority interest of taking the share in the net profit is largely impacted by those profitability of coal-fired units in the third quarter. That is mainly because that equity share in different coal-fired plants of the company. Thank you.

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Towards the company's installed capacity plan, we have about 10 GW of renewables are under construction. This is unchanged compared with the budget that we set at the beginning of this year. That is also sufficient to satisfy the requirement of the full-year plan.

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Going forward to the year of 2027, the company will also focusing on the improvement of renewable sector, both on its quality and its efficiency. The plan for installed capacity increase in the coming next year will keep stable and the precision data will be disclosed at some time. Thank you.

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In the third quarter of this year, the profitability per megawatt hour of wind power generators is about CNY 108.5/MWh.

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There is a quarter-on-quarter decrease. Thank you. That is all.

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Well, I have two questions. My first question regards the geographical distribution of the company's loss. The management state that in the third quarter, the coal-fired units of the company in Shandong Province, Shanghai Municipality, and Chongqing, Guangdong has made a good profit. We also boast a larger installed capacity in Jiangsu Province, Zhejiang Province, Fujian Province and Liaoning Province. What about the coal-fired unit profitability per megawatt hour in those aforementioned areas? The second question goes to, in the third quarter, we have saw an increase on the market-based tariff, which is about CNY 2/MWh, quarter-on-quarter increase. The coal price has increased about CNY 100 per ton, quarter-on-quarter. What does the company expect that on the customer side? Does the increase in coal price and other cost has successfully passed through to the market-based tariff as well as those have signed the monthly contracts? If there is some extra profit based on the market settled tariff.

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In those regions that you mentioned, from the first quarter to the third quarter, in Jiangsu Province, Zhejiang Province and Fujian Province, our coal-fired units has made a profit. In Liaoning Province, the coal-fired units has made a loss on the accumulated base from the quarter one to quarter three. Thank you.

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Towards the company's coal-fired units, we have a profitability per megawatt hour in the first three quarters that scales to CNY 28.6/MWh.

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For even more data about the profitability by different regions, you can contact the IR teams after this conference. Thank you.

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We can draw the conclusion that the coal price increase has been passed through to the tariff side, and we can draw this conclusion from the tariff of the company in the third quarter, as well as those publications of the monthly settlement tariff in October.

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The increase of coal price cannot be fully passed through towards the tariff channel. It's not a linear relation.

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Now, the first reason is because of the regulatory framework. Some areas maybe have a limitation towards the settlement price and contract price.

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Now the second reason is about the comparatively lower signed price of the medium long-term contract yearly. In the year of 2026, we have a larger year-on-year decrease in the yearly contract price. So this kind of increase in cost can only be passed through by a spot market and monthly payment.

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On the other hand, the coal-fired units does not have a marginal contribution when the renewable power generators delivers a higher production.

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Although the tariff based on the market was delivered based on those marginal cost of coal-fired units, it cannot be clear the peak hours. So the coal-fired units can only deliver its contribution during peak hours and balance hours.

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I have two questions. My first question goes to the gas-fired units of the company. We have made a good profit in the third quarter alone, as well as from the first quarter to the third quarter. What is the tariff of the gas-fired units, and what about its unit fuel cost in the three quarters? What about the company's gas procurement structure in the first three quarters of this year? My second question goes to the wind power sector. The company's management has introduced the coal-fired units and PV sectors. What about the tariff and curtailment rate of the company's wind power turbine? Thank you.

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Towards the company's gas-fired units, we have saw an increase about CNY 320 million in its profitability. From the tariff side, the increase is about CNY 880 million. But the power generation has shown a decrease.

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The power generation decrease has delivered a loss about CNY 430 million.

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In the third quarter alone, the gas-fired units has made a profit about CNY 237 million.

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The increase is mainly because the power generation has seen an improvement, which is about a CNY 204 million quarter-on-quarter increase.

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The wind power on-grid electricity tariff is about CNY 457.4/MWh in third quarter alone.

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Towards the company's gas-fired units, I want to know the tariff and the unit fuel cost actually. The second is that in the wind power generators, we have shown a year-on-year decrease in its tariff, but the profitability per megawatt hour has shown an increase year-on-year. What is the reason? Thank you.

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In the third quarter alone, the gas-fired units of the company has set out the price of CNY 721/MWh, and the unit fuel cost is about CNY 471/MWh.

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Profitability per megawatt hour of the wind power generators of the company in quarter three is CNY 108.5/MWh.

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Compared with the third quarter 2025, we have shown a year-on-year increase about CNY 20/MWh.

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The settlement tariff of wind power generators are keep stable while show a slightly decrease. The settlement price of wind turbine this year by third quarter alone is CNY 457.4/MWh. Compared with the third quarter 2025, we have shown a CNY 3/MWh decrease.

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In terms of the cost per megawatt hour of the wind power generators, it has also shown a decrease. In the third quarter alone, the cost per megawatt hour of wind power generators is about CNY 313.6/MWh, which has shown a decrease about CNY 17/MWh. Thank you.

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From January to September, the curtailment rate of the wind power turbine of the company is scaled about 11%.

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The consumption of wind power generators has been optimized in the third quarter alone as the curtailment rate from the first half of this year has scaled about 13%. Thank you.

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I have two questions. My first question goes to the third quarter alone. What is the standard coal price of the coal-fired unit? What is about the proportion of the long-term contract coal fulfillment in the third quarter of this year? My second question goes to the subsidy recovery of renewables from the first quarter to the third quarter of this year. Thank you.

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In the third quarter alone, the coal-fired unit has a standard coal price with tax excluded CNY 933.4 per ton.

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In the third quarter alone, the domestic long-term contract coal covers about 40.79% of the entire coal consumption.

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In terms of the recovery of the subsidy in the renewable sectors, this year the subsidy receivable and the incremental subsidy are balanced. By the beginning of this year, we have about CNY 23.08 billion of subsidy receivable.

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By the end of third quarter, the subsidy receivable scales CNY 22.98 billion. Thank you.

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I have two questions. My first question goes to the coal consumption rates from the first quarter to the third quarter of the company. My second question goes to the tariff expectation in the coming next year. As the market anticipated, the coal price has been increased largely, which is near about CNY 1,000 per ton, that is also conducive for a signing price of the long-term contracts. In Guangdong Province, we have also seen a roof price on the spot market. Going to the next year, what is the company's major consideration in signing the medium and long-term electricity contract? Does the company delivering this signing based on the coal price or based on the supply and demand relation? What about the actual range of the signing price? Does the company believe that the signing price of medium and long term electricity contracts will be beyond CNY 400/MWh?

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From January to September, the coal-fired unit's coal consumption rate of the company goes 300.7 g/kWh.

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As you mentioned, going to the expectation of the signing price or settlement tariff in the next year. To signing the medium and long-term contract, the major consideration of the company, the first one is the judgment on the coal price trend, the second is the supply and demand relation.

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The other factor that will affect the signing price, the first one is the regulatory framework is entering an optimization, and the market entities are being more rational.

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Under these three factors, the coming next year, medium and long-term contract signing price will be stable, while we will see a slight increase, we believe. Thank you.

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In terms of the spot market price in Guangdong Province, now we have seen that there is a problem that taken place in 2025. There is no guideline on the signing price in the coming next year in Guangdong Province. Going forward, we will deliver further research and development on that.

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Now I do have two questions. My first question also goes to the signing of a yearly contract of electricity. What is the company's expectations towards the actual increase in price in the mid and long-term contracts in the coming next year? What about the proportion for mid and long-term contract coverage ratio? We have mentioned that in quarter three, the yearly contracts cover about 60% of the company's budget electricity generation. What is the proportion in the next year we anticipated by different energy types, including coal-fired units, PV sectors and wind sectors? The second question goes to the energy storage, and there is some related policy that support the construction of new type of energy storage facilities. What is the company's view towards the construction of different type of energy storage facilities? Thank you.

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Now, in terms of the signing of a mid and long-term contract of the coal-fired units, the country has delivered some policies both at the national level and provisional level. It has not delivered a specific guideline of the signing of mid and long-term contracts. So we cannot offer you a proportion and the actual tariff improvements in detail right now. The company is now following the trend of the policymakers and also the market, and the proportion of coal-fired units to sign the mid and long-term contract will be based on the role that is transitioning of the coal-fired units itself. It has been transitioned from a supportive power to an ancillary services dominated power supplier, and the company will provision the risks in signing the mid and long-term contracts as well. We can anticipate that the signing or the coverage of mid and long-term contracts in different provinces will be varied, and the company cannot give a specific data right now, and we will deliver different approaches based on the different conditions in those different provinces. Thank you.

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As the company boasts a different proportion of PV and wind power generators in different provinces, the proportion of PV sectors, the wind sectors and the coal-fired units are different in the company's different provinces. So we will deliver the signing approaches of the wind and PV sectors based on the different utilization hours, different policies as well as the mechanism price of renewable sectors. Thank you.

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The company is also delivering some approaches to build a new type of power storage facilities. Since the implementation of Document No. 136, the construction of the company's energy storage facilities has been changed from a policy-driven to a market-driven approach. We also delivered some subjective plans for building the energy storage plans instead of a passive one.

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Now going forward, the company will deliver our construction plan of energy storage facilities based on the grid condition as well as the market conditions of the different provinces and also maximizing the effectiveness of the energy storage facilities based on the Document No. 136. That's all. Thank you.

Thank you so much for all the questions and participation today. Finally, Mr. Wang would like to give us a summary.

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Thank you for participating the first quarter results announcement of Huaneng Power International. Thank you for your long term support to our company. This marks the end of this conference. For any further inquiry, please feel free to contact with the company's IR team. See you next year.

[Non-English content]Thanks again for your attendance of the conference call regarding the third quarter results announcement of 2026. We are looking forward to meeting with all of you in our next results announcement. Thank you.