Huaneng Power International Inc. ADRHNP

Morningstar Rating

Stock Research and Analysis

by Ryan McLean

Economic expansion and an aggressive acquisition strategy have fueled rapid growth at Huaneng Power International, China's largest independent electricity producer. Although demand for electricity has taken a hit from the global recession, the country's Read more

Bulls Say

Long-term electricity demand growth in Huaneng's markets should remain relatively strong for many years, as China's economy continues to outpace others.

Most of Huaneng's power plants are in the more developed eastern areas, where electricity demand is fairly consistent.

Huaneng benefits from long-term contracts that guarantee certain levels of business several years into the future.

Huaneng's close relationship with the Chinese government makes it easy for the firm to get approval for acquisitions and new projects, possibly including new nuclear facilities. Read more

Bears Say

Government control over Huaneng's operations--including its pricing--could have a negative impact on its results in the future.

High coal prices have cut into profitability, exposing the firm's vulnerability to fluctuations in this input.

Chinese government reform aimed at creating a more open and fair power market could increase competition for Huaneng.

Stricter environmental regulations might increase the firm's pollution cleanup costs. Read more

Strategy

Huaneng has used acquisitions to boost growth in recent years and will probably continue to do so. We expect the company to continue to develop new plants while expanding operations at existing facilities. Read more

Management

Cao Peixi was appointed chairman of Huaneng Power in August 2008. All executive officers and directors of the firm are appointed directly by the Chinese government. These close relationships give Huaneng an advantage over rivals when it comes to building Read more

Profile

Huaneng Power International develops, constructs, operates, and manages power plants in China, with generation capacity of more than 39,000 megawatts on an equity basis. Read more

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