Key Developments in the Current Quarter
During the first quarter of 2026, Huaneng Hydropower experienced several key transitions across its operational and financial dimensions:
- Dual Growth in Generation Mix and Volume: Power generation completed in the first quarter reached 23.958 billion kWh (a year-on-year increase of 12.52%). Aside from the growing electricity demand within Yunnan Province and increased volume for the West-to-East Power Transmission project, the core momentum came from a substantial year-on-year expansion in new energy installed capacity (wind and solar), coupled with the optimized mutual regulation of the Xiaowan and Nuozhadu reservoirs, which accelerated the discharge of upstream hydropower storage.
- Margin Compression from Volume-Price Divergence: Although power generation surged by 12.52% year-on-year, operating revenue grew by only 7.02%, and net profit attributable to shareholders rose by a modest 2.32%. This indicates that profit growth significantly lagged behind volume growth, primarily weighed down by an increased proportion of market-based electricity trading, downward pressure on market-based tariffs, and a higher share of generation from lower-tariff power stations, which pulled down the overall average on-grid tariff.
- Notable Cash Flow Optimization: Net cash flow generated from operating activities reached 3.753 billion RMB, representing a sharp year-on-year increase of 24.40%. This highlights improved efficiency in electricity bill settlements and capital collection compared to previous years.
Outlook for the Next Quarter (Q2)
Entering the second quarter, the analytical focus of the market and research institutions rests on supply-demand dynamics and tariff recovery:
- Expected Volume Elasticity in the Wet Season: As the second quarter transitions into the wet season for southern river basins, and with the full commissioning of the TB Hydropower Station and Yingliangbao Hydropower Station at the end of 2025 continuing to ramp up production, power generation elasticity for both hydro and new energy is expected to unlock further.
- Domestic Demand Supporting Tariff Rebound: With local demand from green energy-intensive industries (such as electrolytic aluminum) within Yunnan Province remaining robust, the power supply-demand structure in the province is expected to maintain a tight balance into the second quarter. This is projected to support a gradual stabilization or recovery of market trading tariffs in subsequent quarters, easing the average price pressure seen in Q1.
- Long-Term Growth Runway: The company continues to advance the development of its clean energy base in the Tibet section of the upper reaches of the Lancang River. The capacity expansion of this integrated hydro-wind-solar base will continue to drive asset growth and elevate the power generation baseline over the coming quarters.
EPS Forecast for the Coming Year (Full-Year 2026)
According to the latest research reports and earnings forecasts published in May 2026 by major securities institutions (such as CITIC Securities and Huayuan Securities):
- Projected 2026 Net Profit Attributable to Shareholders: Estimated to fall between 9.052 billion RMB and 9.080 billion RMB, representing a year-on-year growth of approximately 6.44% to 6.76%.
- Projected 2026 Earnings Per Share (EPS): Consensus forecasts from various institutions place full-year 2026 EPS at approximately 0.48 RMB (showing steady growth compared to 0.45 RMB in 2025).
- Institutional Investment Perspectives: Analysts generally believe that despite short-term headwinds from tariff fluctuations, the company’s high dividend payout (with a 44.91% dividend payout ratio for 2025) and the long-term scalability of its premium hydropower projects on the upper Lancang River preserve its high defensive and growth value. Most maintain a “Buy” rating, with target prices reaching up to 12.0 RMB.
Sources:
Eastmoney – CITIC Securities Research Report
Stockstar – Huayuan Securities Research Report Summary
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