Huaneng International 2025 Annual Report Analysis: Net profit attributable to parent increased by 42.17% to 14.41 billion yuan; net operating cash flow increased by 33.02% to 67.213 billion yuan

Interpretation of Core Profitability Metrics

Operating Revenue: Slight Decrease in Scale, Optimized Structure

In 2025, Huaneng International achieved operating revenue of RMB 229.288 billion, down 6.62% year over year. Domestic business is the main contributor to revenue. Domestic power and heat revenues fell 6.31% year over year, mainly due to a double decline in both domestic electricity sales volume and electricity prices: domestic grid-connected electricity volume was 437.563 billion kWh, down 3.39% year over year; the average value-added-tax-inclusive settlement electricity price was RMB 477.08 per MWh, down 3.48% year over year. Among overseas businesses, revenue from the Singapore segment fell 13.73% year over year, while revenue from the Pakistan segment grew 18.33% year over year. Overall, overseas business revenue decreased by 13.76%.

Net Profit: Driven by Costs, Substantial Growth

The company achieved net profit attributable to shareholders of RMB 14.41 billion, a substantial increase of 42.17% year over year. The core driving factor was a significant decline in fuel costs. In domestic thermal power plants, unit fuel cost for electricity sold was RMB 266.88 per MWh, down 11.13% year over year. Profit in the thermal power segment was significantly thicker; among them, the pre-tax profit of the coal machinery segment was RMB 13.270 billion, up 86% year over year.

Profit After Deducting Non-Recurring Items: Improved Earnings Quality

Net profit attributable to listed company shareholders after deducting non-recurring gains and losses was RMB 13.482 billion, up 28.13% year over year. It is consistent with the trend of net profit growth, indicating that the profitability quality of the company’s core business increased in step, and the contribution of non-recurring gains and losses to profit was relatively limited.

Earnings Per Share: Significant Increase

Basic earnings per share were RMB 0.74 per share, up 61.37% year over year; earnings per share after deducting non-recurring items were RMB 0.68 per share, up 40.95% year over year. The growth rate of earnings per share was higher than that of net profit, mainly benefiting from stable share capital scale while earnings grew.

Expense Structure Analysis

Total Expenses: Split by Structure

In 2025, the company’s total period expenses were RMB 1.609 billion, up 1.63% year over year. The expense growth rate was lower than the revenue decline rate, showing the effectiveness of expense management. However, each expense category showed differentiation:

R&D Personnel: A Solid Research Team

The number of the company’s R&D personnel was 14,698, accounting for 26.2% of the company’s total headcount. In terms of education structure, there were 24 PhD postgraduates, 2,192 master’s postgraduates, 10,805 undergraduates, 1,646 junior college graduates, and 31 senior high school or below. The proportion of undergraduates and above was over 90%, indicating that the overall educational level of the R&D team is relatively high. In terms of age structure, those aged 30–40 accounted for 39.3%, those aged 40–50 accounted for 27.3%, and those aged 50–60 accounted for 30.8%. The R&D personnel are mainly middle-aged and young people, combining both experience and vitality.

Cash Flow Analysis

Cash Flow from Operating Activities: Net Inflow Grows Sharply

The net cash flow from operating activities was RMB 67.213 billion, up 33.02% year over year. It was mainly affected by a composite impact of lower revenue and reduced fuel procurement spending. The decline in fuel costs significantly eased the pressure on cash outflows from operating activities, and the quality of cash flows from operating activities improved significantly.

Cash Flow from Investing Activities: Net Outflow Narrows

The net cash flow generated by investing activities was RMB -57.292 billion, year over year decreased by RMB 6.305 billion. This was mainly because the company’s capital expenditure on infrastructure for new energy projects and others during the current year decreased year over year, reflecting that the company’s investment pace has slowed.

Cash Flow from Financing Activities: Turns from Positive to Negative

The net cash flow generated by financing activities was RMB -10.496 billion, year over year decreased by RMB 25.979 billion. This was mainly due to improved operating cash accumulation and capital utilization efficiency, a reduced financing scale compared with the previous year, and also because part of the debt matured and was repaid, causing cash outflows from financing activities to exceed inflows.

Risk Notice

Risk of the Power Industry and Market

As the installed capacity of new energy continues to grow, overall power supply and demand is trending toward being relatively loose. The increase in new energy electricity generation significantly squeezes the space for thermal power. In some regions, the pressure to absorb new energy has become more prominent, and the number of utilization hours for coal-based machinery continues to decline. With the comprehensive entry of new energy into market-based trading, the marginal cost is lower than that of coal-fired power, which will create some impact on market prices. Electricity energy prices may show a downward trend, affecting the company’s overall earnings.

Risk in the Fuel Procurement Market

The “winter and summer” dual-peak characteristics of power load are becoming increasingly evident. The seasonal characteristics of coal consumption during peak and off-peak periods are prominent. There is uncertainty about imported coal due to factors related to Indonesian coal supply policy and international geopolitical issues, which places higher requirements on the company to accurately assess the market and improve its ability to grasp market conditions.

Risk in the Carbon Market

Going forward, the issuance of carbon quotas will continue to be tightened and will be implemented through paid allocation. The compliance cost for carbon emissions per unit of thermal power electricity generation may continue to increase, which could create some pressure on profitability in the thermal power segment.

Environmental Protection Risk

Environmental protection work not only focuses on meeting emission standards for end-of-pipe pollutants, but also examines deep-rooted issues such as optimization of the energy structure from the source, resource conservation and intensive utilization, ecological restoration and governance, and addressing climate change. The company needs to continue investing in areas such as deep energy saving and carbon reduction, compliant water withdrawal and usage, and systematic ecological restoration and governance.

Risk in Power Construction

Situations such as extreme weather, approval procedures for early-stage project matters not proceeding as expected, and a longer cycle to obtain construction land may affect project construction progress, thereby affecting the expansion schedule of the company’s installed capacity.

Compensation for Senior Executives

• Chairman Wang Kui: During the reporting period, the total pre-tax remuneration received from the company was RMB 166,000. His remuneration was obtained from related parties, reflecting the company’s related-party compensation arrangements with its controlling shareholder.
• General Manager Liu Ancang: During the reporting period, the total pre-tax remuneration received from the company was RMB 425,000. This remuneration is linked to the company’s operating performance, reflecting his payback for fulfilling his duties.
• Deputy General Manager Qin Haifeng: During the reporting period, the total pre-tax remuneration received from the company was RMB 1.232 million; Deputy General Manager Du Chanxun: During the reporting period, the total pre-tax remuneration received from the company was RMB 1.210 million; the level of remuneration for deputy general managers matches the management responsibilities of the company’s core business.
• Chief Financial Officer Wen Minggang: During the reporting period, the total pre-tax remuneration received from the company was RMB 584,000. His remuneration was obtained from related parties, which complies with the company’s compensation management arrangements for the person in charge of finance.

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