A total of five Chinese companies in the energy and power industries, which are listed on the MSCI China index, released their pre-audit financial reports on Wednesday, among which three firms reported gains while the two others predicted a drop in their profits.
China National Petroleum Corporation (CNPC), China’s largest oil and gas producer and supplier, expected to see an increase of between RMB 13 billion to 16 billion in its net profit last year, meaning a year-on-year growth of between 165 percent to 203 percent. The company cited a rise in the prices of its main products as the main reason for its sharp profit increase in 2017.
Meanwhile, Xin Jiang-based energy supplier Guang Hui Energy Co., also predicted a rise of up to RMB 454.4 million in its net profit last year, meaning a year-on-year growth of roughly 221 percent. Apart from the price hike in its main products, its report indicated that the company’s distribution and transfer station, which is located at Nan Tong Port and was put into operation last June, also drove its profit growth.
However, compared with the perceived upbeat rhetoric in the reports of China’s energy giants, three Chinese power companies in the downstream industry seem less optimistic, with one company reporting a turnaround while two others are suffering a decline in their profits.
According to the report released by the Datang International Power Generation Co., following a net loss of over RMB 2.623 billion in 2016, the company is projected to bring its financial result back into the positive territory by generating a net profit of somewhere between RMB 1.280 billion and 1.75 billion in 2017. The company attributes its business turnaround to the optimization of its asset structure as well as a substantial surge in its annual electricity output.
While two other power companies appear to be out of luck, with Huaneng Power International, INC. forecasting a decline of RMB 8.1 billion to 9 billion in its net profit last year and Huadian Power International Co. also predicting a net profit reduction of RMB 2.31 billion to 2.75 billion in 2017, meaning a nearly 80 percent year-on-year drop in profits for both companies. Both companies blamed the substantial surge in the coal price for the plunge of their earnings.