Huaneng Power (HK: 902) shares were 8% up in Hong Kong today. This is off the back of the results announcement which was slightly disappointing in one way. Also understandable in that manner. On the other hand the important thing, margins, were up and therefore so were earnings. Don't forget that we are all capitalists here and what matters to us is how much of the revenue, how much of the economy, flows to us as the owners of assets. It's profits that matter that is, not sales.
Of course, there must be sales in order to generate profits. So, rising sales would be a good idea, perhaps, but they're not the aim at all. Huaneng Power provides power inside China - among other things but that's the beating heart of the business. We know there have been varied interruptions within the Chinese economy in the reporting period so we can make allowances for that. We also have a specific Chinese characteristic that we must always keep in mind. Chinese New Year wanders around a bit each year. The interruption of those couple of weeks where the entire economy pretty much closes down happens in different weeks each calendar year. We've therefore - always - got to take first quarter western calendar results with a bit of adjustment when dealing with companies working within China. Just one of those things.
Huaneg Power share price from Hong Kong Stock Exchange
The results were, as we say, not all that good in revenue. But margins did well: “Earnings per share were reported at CNY 0,100. In the prior-year quarter, earnings per share were CNY -0,090. Revenue was reported at CNY 65.27 billion, compared to CNY 65.25 billion in the same quarter last year.”Improving margins on static sales - yes, we're happy with that.
Despite earlier reports of a slip in Huanegn's power sales which, when we include inflation, is true.
It's worth noting that if we want to trade Huaneng then Hong Kong is really our only option. The sponsored ADR was cancelled in the summer of 2022. There is a broker sponsored instrument, (OTCPK: HUNGF) but liquidity is between poor and tiny. HK 902 is the way to trade this if we do indeed want to trade Huaneng.
