Fri Dec 06, 2019 06:38
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CGN POWER (1816)

Principal Activities

The principal activities of the Company are: production of electricity generated mainly from nuclear energy, and provision of related professional technical services; organization and implementation of the construction and management of engineering projects for nuclear power stations; organization of the operation, maintenance and related businesses for nuclear power stations; organization of the design and scientific research for the development of nuclear power stations; and engagement in related investment, import and export businesses.

Latest Results

The Group's profit attributable to shareholders for the 9 months ended 30-09-2019 amounted to RMB 8.30 billion, an increase of 22.4% compared with previous corresponding period. Basic earnings per share was RMB 0.1804. No dividend was declared. Turnover amounted to RMB 43.14 billion, an increase of 18.6% over the same period last year, gross profit margin down 0.4% to 43.8%. (Announcement Date: 31 Oct 2019)

Business Review - For the six months ended June 30, 2019

In the first half of 2019, we managed 22 nuclear power generating units in operation and six nuclear power generating units under construction. The operations of the nuclear power generating units in operation managed by us were safe and stable, and the construction of the nuclear power generating units under construction progressed orderly. We hereby report primarily on the business performance of our nuclear power generating units in operation and under construction during the first half of 2019, and our work in respect of human resources and social responsibilities.

Safety management

Safety is crucial to any company. We always adhere to the concept of “Nuclear Safety is Paramount” and our basic principle of “Safety First, Quality Foremost, Pursuit of Excellence”, and apply them to various stages of the design, construction, operation and decommissioning of the NPPs. Based on our experience in nuclear power operation over the years, we have established a mature safety management system.

In May 2019, we initiated the safety management leadership conference for the fourth consecutive year. With a theme of “Safety Management Improvement”, we constantly strengthened the safety awareness of management at all levels through ways such as precautionary education and panel discussion. The Company launched series of activities such as “On-site Management”, “Observing Nuclear Safety from Compliance with Procedures” and “Formulating and Implementing Code of Conduct for Key Positions” so as to enhance the nuclear safety culture awareness among all employees based on a top-down approach. At the same time, we actively advocated, nurtured and disseminated the nuclear safety culture by organizing safe production month activity, safety management knowledge contests and other activities to encourage participation and continuously enhance the nuclear safety culture among all employees.

By actively participating in international peer review to absorb external experience, we identified our own deficiencies and made improvements, so as to continuously enhance the Company’s safety management. At the invitation of us, the World Association of Nuclear Operators (the “WANO”) conducted a Corporate Peer Review (the “CPR”) on the Company in 2016. In May 2019, we accepted WANO’s CPR Follow-up Visit. As assessed and confirmed by the review experts, all Areas for Improvement proposed by the review team in 2016 have been improved, and the improvement results were highly recognized.

In the first half of 2019, according to the International Nuclear and Radiological Event Scale 《( 國際核事件分級表》) (the “INES”) set by the International Atomic Energy Agency, no nuclear event at level 1Note or above occurred in NPPs we operated and managed in the first half of 2019, maintaining our all-time good safety record of no nuclear incident at level 2 or above.

Nuclear power generating units in operation

In the first half of 2019, the Company actively promoted effective implementation of relevant national policies in various provinces, strengthened communication with local governments and local power grid enterprises, and actively strived for planned power and market power, developed incremental markets, and participated in cross-regional power transmission. With our efforts, the aggregated on-grid electricity generation of the Group and its associates increased by 11.97% in the first half of 2019 as compared with the corresponding period of 2018. For details of the sales of electricity, please refer to section headed “Sales of Electricity” in this announcement.

Operation Performance

Capacity factor, load factor and utilization hours are the three indicators adopted by us to evaluate the utilization of nuclear power generating units. They are mainly subject to the effects of refueling outages for the generating units. According to the arrangements of the annual outage plan, there are certain differences between the duration of refueling outages for different generating units, and refueling outages may be implemented over to the following year. For the same type of refueling outage for the same type of generating unit, there may be small differences between the duration of outages in different years. Meanwhile, load factor and utilization hours of nuclear power generating units are also influenced by temporary operation of the generating units at reduced load of the generating units or shutdown of the generating units resulting from the demand and supply conditions in the electricity market.

Based on the design of pressurized water reactor (the “PWR”) NPPs, the nuclear reactor of each unit in operation must be shut down and refueled after a certain period of time. Taking the safety and economic considerations for NPPs into account, nuclear power operators often make use of the refueling period to intensively conduct preventive and corrective maintenance projects as well as various modifications projects, and this is usually referred to as refueling outage by NPPs. The refueling intervals of our NPPs are generally 12 or 18 months. According to the technical requirements for the operation of NPPs, inspection, testing and maintenance for major equipment are required every ten years. Such activities will be conducted during the refueling period of generating units, and this is usually referred to as ten-year outage by NPPs. In addition to the refueling outage and ten-year outage, the refueling outage of new generating units conducted in the following year after commencement of operation is usually referred to as initial outage.

During the refueling outage period, we carry out inspection, maintenance and modifications for equipment with selectivity based on the requirements of NPPs preventive maintenance guidelines, in-service inspection guidelines, requirements on operation technology specification as well as the experience on the operation of generating units to secure the safety of the units, improve the operating performance of the equipment, and ensure that the units would maintain good operating conditions in the next cycle according to the design requirements.

Considering the economic factors and arrangements for related works, refueling outages intervals of nuclear power generating units are not fixed to every 12 or 18 months. In order to ensure the safe operation of the generating units, we usually take local power load fluctuations into account and communicate with local power grid companies to rationalize the refueling outage plans for generating units. As the needs for inspection and maintenance projects are different, the duration of each refueling outage is not identical. More inspection items are required for the initial and tenyear outages, resulting in a longer inspection period compared to that of regular refueling outages. According to the specific operating conditions of each generating unit, we continue to enhance and develop targeted refueling outage plans, reasonably arrange inspection and maintenance projects, and actively adopt advanced technology to improve the efficiency of inspection and maintenance, in order to have effective control over the duration of each refueling outage on the premise of ensuring the quality of safety.

In the first half of 2019, we completed 11 refueling outages for 22 nuclear power generating units in operation, one of which was the refueling outage of Ningde Unit 1 carried out at the end of 2018. The total number of calendar days for refueling outages in the first half of 2019 was approximately 344 days.

Environmental Performance

In the first half of 2019, the radioactive waste management of each nuclear power generating unit in operation operated and managed by us has strictly complied with the national laws and regulations, and has met the standards of the relevant technical specifications.

Nuclear Power Generating Units under Construction

The quality of NPPs under construction is important for the safe and efficient operations of NPPs power units after commencement of operation. We meticulously organize project construction in strict compliance with the requirements of relevant laws and regulations. For all the major construction milestones being required to pass the inspection of the national regulatory authority, we would enter into the next phase of work only after passing the inspection of the national regulatory authority which confirmed our full compliance with the requirements. We also attach importance to learning from experience feedbacks of domestic and foreign NPPs construction, and improving the safety and quality of our construction work.

As of June 30, 2019, among our six nuclear power generating units that were under construction, two were in the grid connection phaseNote, three units were in the equipment installation phase and one unit was in the civil construction phase.

We control, supervise and manage safety, quality, progress, investment, technology and environment of our construction projects, so as to ensure that the projects under construction comply with various regulatory requirements and facilitate safe, stable and economical operation of the units after commencement of commercial operation.

The construction process of nuclear power generating units may be affected by various factors including, among others, delivery delays, increase in the cost of key equipment and materials, delay in obtaining regulatory approvals, permits or licenses, unexpected engineering, environmental or geological problems, change of localization ratio as well as the implementation of additional PRC regulatory and safety requirements for nuclear safety, so the actual date of commencement of operation may be different from such expected date. We will disclose updated information pursuant to the relevant requirements from time to time.

Sales of Electricity

The supply and demand for electricity in the PRC was generally at ease in the first half of 2019. As the economic development condition of each province differed, the supply and demand for electricity in some provinces where our nuclear power generating units are located varied. In light of the complex power market situation, the Company adopted the power sales strategy of “striving for more shares of planned on-grid power generation, striving for better market power generation and power tariff, striving for development and utilization of incremental market and striving for more shares in power transmission across provinces and regions” in the first half of 2019, taking positive steps to address the impact of increase in precipitation and other factors. By implementing these strategies, the power generation plan of the Company for the first half of the year was basically completed, the overall economic benefits of the Company were guaranteed.

In the first half of 2019, the electricity consumption of Guangdong province increased by 3.31% over the corresponding period of previous year. The Company’s nuclear power generating units in Guangdong province continued to participate in electricity market in the “full capacity power generation with favourable tariff” model in 2019, recording a year-on-year increase of 25.15% in on-grid power generation.

In the first half of 2019, the electricity consumption of Fujian province increased by 1.19% over the corresponding period of previous year. In the first half of 2019, under the influence of climate conditions and as requested by power grids, Ningde Nuclear recorded a year-on-year increase in the duration of reduced load, and a year-on-year decrease of 17.87% in on-grid power generation.

In the first half of 2019, the electricity consumption of Guangxi Zhuang Autonomous Region increased by 10.90% over the corresponding period of previous year. In the first half of 2019, Fangchenggang Nuclear actively developed the incremental market, and obtained market-based power generation targets that surpassed the corresponding period of previous year. At the same time, under the influence of climate conditions and as requested by power grids, the duration of reduced load increased over the corresponding period of previous year, and a year-on-year decrease of 8.91% was recorded in on-grid power generation.

In the first half of 2019, the electricity consumption of Liaoning province increased by 4.92% over the corresponding period of previous year. In the first half of 2019, with proactive market expansion, Hongyanhe Nuclear entered into larger transactions within the province, and recorded a year-on-year increase in the trading volume of bilateral trades in the province and a year-on-year increase of 24.53% in the on-grid power generation.

In the first half of 2019, our nuclear power generating units in operation achieved an on-grid power generation of 79,952.31 GWh, representing a year-on-year increase of 11.97%. Excluding Guangdong province, market-based power generation volume of nuclear power generating units accounted for approximately 57.62% of the total on-grid power generation. Taking into consideration the model adopted by the nuclear power generating units in Guangdong province, being “full capacity power generation with favourable tariff”, the market-based power generation volume of our 22 nuclear power units in operation accounted for approximately 33.24% of the total on-grid power generation.

While striving to increase on-grid power generation, we also paid close attention to the on-grid tariffs of operating units. On March 20, 2019, the trial on-grid tariffs for the first batch of thirdgeneration nuclear power projects were approved by the NDRC, including the followings: (i) the trial on-grid tariffs under the planned power generation of Taishan Unit 1 and Unit 2 shall be at RMB0.4350/kWh (tax inclusive) and shall take effect from the date of commencement of commercial operation to the end of 2021; and (ii) on the basis of ensuring safety, the power generation plan in the relevant provinces shall be arranged in accordance with the principle of full capacity. Power generation within the utilization hours in the project design shall be executed in accordance with the government tariffs while power generation beyond the utilization hours shall be executed in accordance with the market tariffs. For details, please refer to the announcement of the Company dated March 28, 2019.

The NDRC issued the Notice on Lowering General Industrial and Commercial Electricity Prices 《( 關於降低一般工商業電價的通知》) on May 15, 2019. Pursuant to the above-mentioned notice, the nuclear power on-grid tariffs approved by the NDRC (except for the third-generation nuclear power units) were adjusted by the provincial pricing authorities after considering the factors that the VAT rate is reduced and became effective from July 1, 2019. Therefore, this adjustment will not affect Taishan Units 1 and 2 of the Group. For details, please refer to the announcement of the Company dated May 24, 2019. As of June 30, 2019, the provinces where our nuclear power generating units in operation are located adjusted their nuclear power tax inclusive on-grid tariff, which became effective from July 1, 2019. The table below shows the adjusted on-grid tariff (including VAT) of nuclear power generation units in operation under the power sales plan.

Business Outlook - For the six months ended June 30, 2019

In the first half of 2019, the Company basically completed its power plan for the first half of the year through active communications with local governments and power grid enterprises. In the second half of 2019, we will maintain safe and stable operation of all the generating units in operation, ensure smooth progress of the generating units under construction, formulate power generating strategy, seize market opportunities, strive to increase on-grid power generation and guarantee overall economic benefits.

In the second half of 2019, we plan to carry out the following initiatives:

• Under the premise of ensuring safety and quality, ensure smooth progress of the projects under construction as planned. In the second half of 2019, the Taishan Unit 2 will be put into commercial operation (the Yangjiang Unit 6 was qualified for commercial operation on July 24, 2019);

• Maintain safe and stable operation of all the operating units, with four planned refueling outages in the third quarter (including the initial outage of Yangjiang Unit 5 which started in June), and three planned major refueling outages in the fourth quarter;

• Continue the implementation of our lean management strategy, enhance internal resources allocation and cooperation, effectively control the construction cost of projects under construction and the maintenance cost of operating units;

• Track and promote the implementation of the Action Plan and the Provisional Measures for Nuclear Power Offtake under the Condition of Securing Nuclear Safety in various regions. We will proactively adapt to the changes in electricity market situation and respond to factors including increase in precipitation in summer and heating provision periods in winter, striving for more generation of power with full capacity by adopting a more flexible marketing model and multiple initiatives;

• Closely follow the changes of domestic and international economic and financial environment, adhere to the principle of prudence, prioritize capital safety; reasonably utilize proceeds from the initial public offering of A Shares in compliance with regulatory rules, improve capital use efficiency and reduce financial costs; continuously monitor capital risks and strive to minimize the effects of domestic and foreign market volatility to the Company’s operation by timely adjusting our strategies according to changes in market situation.

Source: CGN Power Co (01816) Interim Results Announcement

Business Nature

We are the largest nuclear power producer in China, as measured by both total installed nuclear power generating capacity and attributable installed capacity, according to the CNEA Report. We operate and manage nuclear power stations, sell electricity generated by these stations, manage and oversee the construction of nuclear power stations and provide related technical research and development and support services. All of our current installed capacity is attributable to nuclear power stations in China.

Prospect

Chairman
Zhang Shanming
Contact Info
Company Address:
36/F Tower Two Times Square1 Matheson Street Causeway Bay Hong Kong
Web: www.cgnp.com.cn
Quote
HSI: 26,217.04 154.48
2.02
0.02 (1.0%)
As of16:15 05 Dec 2019
Open: 2.01 52Wk High: 2.31
Day High: 2.02 52Wk Low: 1.81
Day Low: 1.99 P/E: 9.266
Prev. Close: 2.0 Yield: 4.173%
Volume: 20.74M
Mkt Cap: 22.33B
Turnover: 41.72M NAV: 1.782
Quotes are delayed by at least 15 minutes.
Contact CGN POWER
Company Address:
36/F Tower Two Times Square1 Matheson Street Causeway Bay Hong Kong
Web: www.cgnp.com.cn

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