Interim Results 2011 29th August 2011 Hong Kong. Results Summary in 1H Business Performance by...
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Interim Results 2011 29th August 2011 Hong Kong Slide 2 Results Summary in 1H Business Performance by Sector in 1H Market and Policy Review in 1H Operation Outlook in 2H The Corporate 12th Five-Year Plan Slide 3 1H 2011 Results Highlights Operating Data 3 Installed Capacity Utilization Hours Gross Generation Unit Coal Consumption Rate Internal UsageEquivalent Availability Factor (MW) (%) (g/KWh)(Hours) (Billion KWh) 8.8% 253 2.71 19.3% 5.25 0.15 Source: Corporate Interim Results 2011 Slide 4 1H 2011 Results Highlights Financial Data 4 Note: Basic earnings per share has been taken into account the impact of A-share non-public offering in May. Operating Revenue Basic Earnings Per Share Net Profit Debt to Asset Ratio Shareholders Equity Total Assets (100 million RMB) (%)(RMB/Share) (100 million RMB) 15.1% 0.001 11.5% 2.2% 1.45 24.5% Source: Corporate Interim Results 2011 Slide 5 Cost Structure and Change Analysis Company Cost Breakdown YoY Changes (Calculated in cost per unit generation) Source: Corporate Interim Results 2011 5 Cost Breakdown in 1H 2010 Cost Breakdown in 1H 2011 Slide 6 Results Summary in 1H Business Performance by Sector in 1H Market and Policy Review in 1H Operation Outlook in 2H The Corporate 12th Five-Year Plan Slide 7 Power Business: Capacity Grew and Structure Optimized 7 In 1H, the Company has 1208.1MW new capacity coming on stream and the generation capacity has been raised successively. In the meantime, the capacity structure has been further optimized by higher proportion of new energy. Capacity Growth in 1H 2011 2.6% 3.2% Capacity Structure (by 30 June 2011) Capacity Structure (by 31 December 2010) Source: Corporate Data and Information Slide 8 Power Business: Power Generation Increased Steadily 8 Gross Generation (100 million KWH) 19.1% Thermal Power Generation (100 million KWH) 18% Hydro Power Generation (100 million KWH) 34.3% Wind Power Generation (100 million KWH) 134.5% Source: Corporate Data and Information Slide 9 Power Business: Utilization Further Raised 9 Corporate Average Utilization Hour Thermal Units Average Utilization Hour In 1H, the Company has achieved average utilization of 2557 hours, with a yoy increase of 253 hours. Compared with National Average Compared with 1H 2010 251 253 158 246 Source: Corporate Data and Information Slide 10 Power Business: New Energy Project Contribution Raised Greatly 10 EBT From Thermal Power 10 thousand RMB EBT From Hydro Power 10 thousand RMB 43% 276% 130% Thermal power business still plays as the major contributor of profit. However, due to the hiking coal price, its profitability has been lowered. The contribution of new energy like hydro and wind power have been raised remarkably. Source: Corporate Data and Information EBT From Wind Power 10 thousand RMB Slide 11 To strengthen the security management of operational nuclear facilities. All the units of nuclear facilities need to strictly abide by the operational guidance and strengthen operational management. The regulating authorities need to strengthen inspection and guide the enterprises to find and eliminate those potential dangers. To strictly approve the new applied nuclear power projects. To promote the nuclear security plan and adjust the mid-to-long term nuclear development plan. Before the nuclear security plan approved, pause the approvals of nuclear power projects including those under planning. Security Inspection Security Management of Operational Facilities Inspection on Projects under Construction Strictly Approve New Projects The Policy Announced by the State Council of China after Nuclear Accident in Japan To organize complete security inspection on the nuclear facilities within our territory right way. Through delicate security assessment, to take measures to smooth away any security loopholes so as to guarantee absolute security. To inspect the nuclear projects under construction. To make the security evaluation on all the nuclear power projects under construction with the most advanced standard. To those projects not reaching the standard, it must be stopped from construction. The inspection on Ningde Nuclear Power Project has been finished and there is no impact to the commencement time and investment budget. The Progress of Datangs Nuclear Power Projects There is a little bit impact to the construction schedule of Liaoning Xudapu Nuclear Power Project because the technology need to be re-determined by the government. 11 Power Business: Nuclear Projects Progressed Smoothly Source: Corporate Information Slide 12 12 Sichuan Huangjinping Hydro Power (850MW Hebei Wanshengyong Wind Power (150MW) Inner Mongolia Shengli Coal Mine (20million tons/year) Liaoning Faku Wind Power (48MW) Sichuan Huangjinping Hydro Power (850MW) Ningxia Qingtongxia Wind Power (48MW) In 1H, the company has five power projects with total capacity of 1116MW approved by the government, as well as one coal project with capacity of 20million tons per year. Hydro-power Wind Power Solar PowerCoal Mine Source: Corporate Data and Information Ningxia Qingtongxia Solar Power (20MW) Power Business: Projects Acquired Approvals Slide 13 Power Business: Energy Saving & Emission Cuts Achieved In 1H, the Company has strengthened its environmental protection management. The emission indicators of major pollutants had been further improved and now perform far better than the industrys average standards. 13 Source: Corporate Data and Information Unit SO2 Emission (g/KWh) Unit NOX Emission (g/KWh) Unit Ash Emission (g/KWh) Unit Waste Water Emission (g/KWh) Unit Coal Consumption (g/KWh) Slide 14 14 The Companys Coal Production in Recent Years Coal MineRaw Coal Production (10thousand tons) 2008200920101H 2011 Yuzhou 500645690358 Tashan 1000170020201140 Shengli 300 1000435 Baoli -- 11862 Total 1800264538281995 In 1H, the Companys four coal mines have produced about 20million tons of raw coal. Besides, the profit from coal mines also increased. e.g. the investment benefit in 1H from Tashan and Yuzhou Coal Mines were RMB 221million and RMB 45million separately. Coal & Transport Business: Coal output and Earnings Increased Source: Corporate Data and Information Slide 15 15 1 Railway The company was prepared to invest to construct the Huzhune Railway(249km); By the end of June 2011, the company has invested to operate and construct railway which are over 4000km long The company has invested to construct the port in Huludao, Liaoning Province; The company has locked up 20million tons of coal turnover in four important coal ports in North China The four 45000 DWT vessels of Jiangsu Datang Shipping Company were put into commercial operation in 1H; By 30th June, the companys total shipping capacity has reached 400000 DWT and the whole year shipping volume is expected to reach 7million DWT Coal & Transport Business: Transport Projects in Progress Source: Corporate Data and Information Port Shipping Slide 16 16 2# & 3# Gasifier and MTP Facilities Technique Renovation and repair Output Qualified Methanol February - July January End of June At Current Integrated Trial Operation Produce Qualified PP and Keep Stable Operation The Updated Progress of Duolun Project Coal-Chemical Business: The Updated Progress of Duolun Project Source: Corporate Data and Information Before the end of 2011 2. From February to July, the company made complete technique renovation and repairs to the flaws appeared in the proliferation period and laid firm foundation for the whole process trial operation; 1. In January 2011, the 2# & 3# gasifiers and the MTP facilities have successfully passed through trial operation; 3. By the end of June, the qualified methanol (99% purity) has been produced and all the working section has been broken through individually; 4. Currently, the facilities are in process to be put into integrated trial operation; 5. Before the end of 2011, qualified end product PP will be produced and the facilities will achieve stable operation. Slide 17 17 Keqi Coal to Gas Project The process of gasification, air separation, purification, methanation, polluted water purification, etc. have been constructed and installed according to schedule; The water pipeline from Dashimen Reservoir to Keqi Project has been finalized; By the end of June, 297.63km of the gas pipeline with total length of 316km has been finished. Fuxin Coal to Gas Project The main facilities like gasification, air separation, low temperature methanol wash, thermal power island have started construction since May; The concreting of the units in air separation section has been finalized; The railway has been in construction according to schedule. Coal-chemical Business: The Updated Progress of Coal-gas Projects Source: Corporate Data and Information Slide 18 Results Summary in 1H Business Performance by Sector in 1H Market and Policy Review in 1H Operation Outlook in 2H The Corporate 12th Five-Year Plan Slide 19 National power demand remain strong. In 1H, the national power demand reached 2251.5 billion KWh, with yoy growth of 12.2%. In 1H, power shortage took place in East, North and Central China and the impact is becoming spreading out, earlier and severe. 19 The power demand in major heavy industries like metallurgical, construction material and chemicals grew fast with total power consumed of 748.2billion KWh in 1H, adding 3.8pt in power demand growth. Strong Power Demand & Worsening Power Shortage Source: China Electricity Council Entering into the 12th Five-Year Plan period, the industrialization and urbanization of our country will be promoted and heavy industries will remain in high proportion in national economy. Therefore, the power supply shortage is expected to be further enlarged. Slide 20 Coal Price Continued Hiking Coal Supply and Demand and Price Trend The Companys Contract Coal Fulfillment In 1Q, the coal price was stable at high level. While since the late March, the spot coal price started to hike and kept hiking for 14 weeks. In 1H, the coal inventory of power plants were normal in general. However, due to coal price, transport and supply issues, the coal supply became a problem in certain region periodically.. In 1H, the company has 17.78million tons of contract coal delivered, with the delivery ratio of 88%,which is about 6 percent higher than 1H 2010. The average standardized contract coal price was 533.62RMB/ton, rising 5.2% yoy basis. 20 Source: www.China5e.com, The Company data and informationwww.China5e.com Slide 21 Tariff Adjustment in Favor of the IPPs 21 Recent On-grid Tariff Adjustment (Fen/KWh) Main Reasons for on-grid Tariff Increase: The country has raised the thermal power on-grid tariff in certain provinces separately since 1st January 2010, 10th April 2011 and 1st June 2011; The commencement of new units in 2H 2010 in provinces like Jiangsu and Guangdong with higher on-grid tariff has driven up the companys average on-grid tariff 6.2% Corporate Average On-grid Tariff (RMB/MWh) Source: The Company Data and Information, Corporate Announcement Slide 22 Results Summary in 1H Business Performance by Sector in 1H Market and Policy Review in 1H Operation Outlook in 2H The Corporate 12th Five-Year Plan Slide 23 General Power Shortage Thermal Utilization Enjoys High Growth It is expected the national average utilization hours in 2011 will reach 4650; the utilization hour of thermal units will reach 5250, about 200 hours higher than that of 2010. It is expected the national peak load in this summer will increase 14% and the capacity shortage will total around 30-40GW in North China, East China, Central China and Southern Grid. While, in Northeast, Northwest and West Inner Mongolia Grid, there is 20GW surplus in capacity. It is expected the national capacity shortage will be around 25- 30GW in the winter peak season. In 2H, the power demand will remain high growth. Affected by the uneven location of new added capacity, imbalanced construction of power plant versus power grid, less new added thermal power capacity, the general power supply compared to demand will be in shortage. 1.Well done in market analysis and forecast and coordinate alternative power generation plan; 2.Well organize the production of hydro and wind power projects to avoid water and wind rejection; 3.Keep on coordination with the grid company after Huhhot Thermal Power Plant return as internal power plant; 4.Try hard to lower the internal electricity usage ratio. Power Demand Will Maintain Strong Growth 23 Source: China Electricity Council, The Companys Data and Information Power Supply Trends in Shortage in 2H Measures to raise Electricity Generations in 2H Structural Power Shortage Slide 24 Coal Price In 4Q, the coal price will rebound Since the 2H, the coal price has been dropping for over 5 weeks In 2H, the BSPI average price has experienced slight dropping over 5 weeks. It is expected to continue till the end of September without contingent occurrence. In 4Q, the North part of China will step into heating season, and the inelastic coal demand will drive the spot coal price up. However, the coal price hike will not be remarkable and unlikely be over the high rate in June. Focusing on Fuel Cost Control To fulfill whole process fuel management and optimize the fuel structure Promote coal blending and increase import coal Lower fuel cost by managing the time lag between coal procurement and storage Strengthen coal delivery by active communications between coal mines and railway Try to raise the thermal coal contract fulfillment ratio 24 Coal Price will drop followed by rising in 2H Source: China Electricity Council, www.china5e.com Slide 25 Main Factors affecting the Earnings in 2H 25 In 2H, the coal price will maintain at high level with high probability of further hiking and this will impact the profitability of coal-fired power plants. Coal Price Tariff Interest Rate Fuel cost-tariff pass through mechanism is still the best way to ease the conflicts between coal price liberalization and tariff regulation. The China Electricity Council suggested the government to adjust the on-gird tariff timely. To control the high inflation, there is still high possibility for the central bank to raise the interest rate in 2H. This will bring more pressure for the fund raising and financial expense control. Factors Source: The Companys Information Slide 26 Various Ways to tackle the Headaches of the IPPs Reduce the income tax rate for the IPPs The government authorities help find more ways to raise money Increase the capital fund injection into the IPPs Raise the on-grid tariff at the right time 26 Source: China Electricity Council The China Electricity Council suggested to use multiple ways to ease the difficulties of the IPPs Slide 27 Results Summary in 1H Business Performance by Sector in 1H Market and Policy Review in 1H Operation Outlook in 2H The Corporate 12th Five-Year Plan Slide 28 The Guidelines for the Companys 12th Five-Year Plan 28 Strategy Sticking on the companys Development Strategies of focusing on the power generation business whilst deploying diversifications. Taking power business as core, coal business as fundamental, coal-chemical and metallurgical (integrated use of high-alumina fly ash) as new profit source, railway, port and shipping as bond to position each industry. To develop a batch of sector basis with core competitiveness, good profitability, advanced technology, summarized innovation and diversified synergy in regions with resource advantage, market advantage or policy advantage so as to building up the companys benefit and brand name. Continue to enhance coal-fired power; aggressively expand its hydropower; continuously develop wind power; strategically develop nuclear power; moderately develop solar energy; focus on suitable coal operations; aggressively and steadily develop coal- to-chemical projects; speedily develop the integrated use of high-alumina fly ash; and secure a complementary development of railway, port and shipping. Source: The Companys Information Scheme Mode Slide 29 The Strategic Devise of the Six Profit Basis 29 In the 12th five-year plan period, the company is focused on building six profit basis that can integrate the projects with synergistic effects as well as geographic interfaces. Western Inner Mongolia Coal-Electricity-Aluminum Profit Base Western Inner Mongolia Coal-Electricity-Aluminum Profit Base Eastern Inner Mongolia Energy Chemical Profit Base Eastern Inner Mongolia Energy Chemical Profit Base New Energy Profit Base New Energy Profit Base South East China Hydro Power Profit Base South East China Hydro Power Profit Base Southeast Coastal Coal-fire Power Profit Base Southeast Coastal Coal-fire Power Profit Base Pan-Bohai Power Profit Base Pan-Bohai Power Profit Base Source: The Companys Information Slide 30 30 The Duolun project will break through its production process and step into stable production period The Phase of Fuxin Coal-to-gas project will be put into commercial operation Promote the Coal-chemical Projects to set up a Good Layout Source: The Companys Information The Phase of Keqi and the Phase of Fuxin Coal-to-gas projects will be put into commercial operation The Duolun project will reach its full load; the Phase of Keqi and the Phase of Fuxin Coal-to-gas projects will be put into commercial operation The Duolun project will raise its load factor; the Phase of Keqi Coal-to-gas project will be put into commercial operation Slide 31 Thanks! 31