Huaneng Power International Inc. - ADR

Top-line/profit under pressure (IFRS, 3Q26): revenue down, profits down sharply - 3Q26 consolidated operating revenue: CNY 165.85bn, -4.12% YoY. - Net profit attributable to shareholders: CNY 7.82bn, -47.29% YoY; EPS CNY 0.39. - Surprising/negative: despite coal price pressure, segment performance was mixed—some thermal still profitable, but group profit still fell heavily (suggesting offsetting factors like margin compression in parts of the fleet, minority interests, and/or cost/fair value/mix effects).

Thermal (coal/gas) economics: coal tariff largely pass-through; more loss-making units; gas improved - Coal-fired on-grid tariff (3Q26): ~CNY 465/MWh; thermal economics supported by tariff seasonality and fuel pass-through. - Loss-making coal units: 43.7% in 1Q26, +10pp QoQ (implying deterioration early in the year and ongoing dispersion across regions). - Gas-fired (3Q26): profit ~CNY 237m; management cited improved output QoQ (profit better even while overall group profit declined). - Key negative: coal price increases cannot be fully and linearly passed through (regulatory limits + contract price lag + renewable merit-order effects).

Renewables (wind/PV): profitability bottoming, curtailment manageable - Wind/PV profits (3Q26): wind ~CNY 886m, PV ~CNY 1.48bn; coal/gas/hydro/biomass mixed with biomass negative (loss ~CNY -12m). - Management view: renewables efficiency/profitability have not improved yet despite higher generation, but tariff is “at the bottom” and expected to rebound (policy impact—renewables fully participating in spot market per “Document No.136”, first year effect). - Loss rates: 10.2% of wind and 7.7% of PV made losses from 1Q–3Q. - Wind curtailment: ~11% (Jan–Sep); improved to ~13% in 1H, with third-quarter consumption optimized. - Good point: management reported PV marginal contribution positive in 3Q and QoQ tariff/output improvements (PV tariff ~CNY 372.4/MWh in 3Q, +~1.5/MWh QoQ).