Huadian ushers in a 10-billion-yuan IPO, with an annual revenue exceeding 30 billion yuan.

Text by | Zhao Siqi

Edited by | Peng Xiaoqiu

Hard Krypton has learned that recently, Huadian New Energy Group Co., Ltd. (hereinafter referred to as "Huadian New Energy") has completed its registration and is about to be listed on the main board of the Shanghai Stock Exchange.

In this listing, Huadian New Energy plans to raise 18 billion yuan, which is currently the largest IPO of the year. The funds will be used for the construction of wind power and solar power projects. It is worth noting that compared with the original plan of 30 billion yuan, the company's final fundraising scale has been cut by 40%.

As the new energy business integration platform of China Huadian, one of the five major power generation groups in China, Huadian New Energy is mainly engaged in the development, investment, and operation of new energy projects mainly including wind power and solar power, and provides electricity products to 31 provinces (municipalities and autonomous regions) in China.

From 2021 to 2024, the company's revenue continued to grow, reaching 21.74 billion yuan, 24.67 billion yuan, 29.58 billion yuan, and 33.97 billion yuan respectively. From 2021 to 2023, the company's net profit attributable to the parent company increased steadily, reaching 7.25 billion yuan, 8.52 billion yuan, and 9.62 billion yuan respectively. However, in 2024, due to the decline of national renewable energy subsidies and the gradual implementation of the parity grid - connected policy, its net profit attributable to the parent company slightly decreased to 8.83 billion yuan.

(Source: Company's 2024 financial report)

The profit level of the new energy power generation industry is mainly affected by the upstream equipment manufacturing and engineering construction costs, as well as the downstream on - grid electricity price and electricity consumption. Recently, the prices of wind turbines and photovoltaic modules, which account for a large proportion of the upstream costs, have decreased with the improvement of manufacturing technology and the industry's policy - driven cost reduction and efficiency improvement. At the same time, China's total social electricity consumption has increased from 4.6928 trillion kWh in 2011 to 9.2241 trillion kWh in 2023, with an average annual compound growth rate of 5.79%. The company's revenue and profit levels have generally increased steadily.

The company's main business includes the electricity sales of wind and solar power. From 2021 to the first half of 2024, its revenue accounted for more than 99%. Among them, the wind power generation business contributed the most, with its revenue accounting for more than 70% from 2021 to the first half of 2024. In the same period, the revenue share of the company's solar power generation business increased, reaching 18.24%, 19.55%, 25.56%, and 29.98% respectively, becoming the main growth point.

(Source: Company's prospectus)

In recent years, the continuous growth of the company's installed capacity has led to an increase in the on - grid electricity volume of both wind and solar power generation businesses. Among them, the on - grid electricity volume of the wind power generation business increased by nearly 30% from 2021 to 2023, while the on - grid electricity volume of the solar power generation business increased more rapidly, nearly tripling from 2021 to 2023.

While the on - grid electricity volume continues to grow, the problem that the company's energy utilization rate is lower than the national average deserves attention. From 2021 to the first half of 2024, the company's wind curtailment rates were 4.96%, 4.78%, 4.03%, and 5.44% respectively, slightly higher than the national average of 3.1%, 3.2%, 2.7%, and 3.9% during the same period; the light curtailment rates were 2.5%, 3.11%, 4.77%, and 7.9% respectively, and the gap with the national average of 2%, 1.7%, 2%, and 3% during the same period has been widening year by year. With the construction of China's power transmission channels, the development of energy storage, and the advancement of the dual - control policy on energy consumption, problems such as limited power consumption and external transmission capacity and limited power peak - shaving capacity are gradually being solved, and the company's energy utilization rate is expected to increase.

Overall, against the background of global carbon peaking and carbon neutrality, China's "14th Five - Year Plan" stipulates that the proportion of non - fossil energy consumption will reach about 20% in 2025 and exceed 80% in 2060. Therefore, the new energy power generation industry is in a period of rapid development.

In the industry, China's five major power generation groups - Huaneng Group, Datang Group, China National Energy Group, China Huadian, and State Power Investment Corporation still occupy the leading positions in the market, accounting for about 40% of the total market share. Calculated by installed capacity, the company has a market share of nearly 6% in the domestic wind power industry and 3.71% in the solar power generation industry.

In the segmented fields, the company's comparable listed companies in the same industry include Longyuan Power, Three Gorges Energy, Datang New Energy, Jieneng Wind Power, and Solar Energy. In terms of revenue and profit scale, installed capacity, and on - grid power generation, the company is at the forefront of the industry.

From 2021 to the first half of 2024, the company's comprehensive gross profit margin was 55.7%, 54.36%, 51.94%, and 53.97% respectively, slightly higher than the average of 50.17%, 52.09%, 49.78%, and 51.37% of comparable listed companies in the same industry. Among them, the wind power generation business contributed the most, and its gross profit margin accounted for more than 70% during the same period. However, due to the implementation of the parity grid - connected policy for new wind power projects, the gross profit margin of the company's wind power generation business decreased from 54.26% in 2022 to 51.23% in 2023, resulting in a decline in the comprehensive gross profit margin that year.

(Source: Company's prospectus)

It is worth noting that as of the first half of 2024, the company's asset - liability ratio reached 71.9%, higher than the average of 61.9% of comparable listed companies in the same industry. The reason is that the company mainly raises project construction funds through debt financing. Considering that the total investment amount of the company's fundraising projects reaches 80.4 billion yuan, while the fundraising amount for listing is 18 billion yuan. After the listing, the company still faces relatively large debt pressure.

In the first half of 2024, the top five customers of the company's wind power generation business were State Grid Xinjiang Electric Power, Yunnan Power Grid, State Grid Fujian Electric Power, Guangdong Power Grid, and Inner Mongolia Electric Power, with a total sales share of 39.6%. The top five customers of the solar power generation business were State Grid Xinjiang Electric Power, State Grid Hubei Electric Power, State Grid Jiangsu Electric Power, Yunnan Power Grid, and State Grid Gansu Electric Power, with a total sales share of 37.8%. There is no single - customer dependence.

The company's predecessor, Fuqing Wind Power, was established in 2009 with the investment of Huadian New Energy Development. After several rounds of new energy asset restructuring in 2021, it was renamed Huadian New Energy, and finally completed the joint - stock reform in 2022.

The company's controlling shareholder is Huadian Furi, and the actual controller is China Huadian. China Huadian indirectly controls 52.40% of the company's shares through its wholly - owned subsidiary Huadian Furi and indirectly controls 31.03% of the company's shares through its controlled Huadian International, with a total control of 83.43% of the company's shares.