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TheStreet Open House

Huaneng Power International Inc
HNP : NYSE : Utilities
$48.47 0.03 | 0.06%
Today's Range: 47.65 - 48.79
Avg. Daily Volume: 72,200
09/16/14 - 12:04 PM ET

Financial Analysis


HUANENG POWER INTERNATIONAL's gross profit margin for the second quarter of its fiscal year 2014 has significantly increased when compared to the same period a year ago. Even though sales decreased, the net income has increased. HUANENG POWER INTERNATIONAL has very weak liquidity. Currently, the Quick Ratio is 0.26 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity decreased from the same period a year ago, despite already having very weak liquidity to begin with. This would indicate deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has increased by 10.14% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q2 FY14 Q2 FY13
Net Sales ($mil)5054.985178.87
EBITDA ($mil)3257.882919.97
EBIT ($mil)1181.91014.56
Net Income ($mil)505.05504.98


Balance Sheet Q2 FY14 Q2 FY13
Cash & Equiv. ($mil)1927.552558.5
Total Assets ($mil)42810.1242772.93
Total Debt ($mil)24511.5926414.34
Equity ($mil)10376.059420.46


Profitability Q2 FY14 Q2 FY13
Gross Profit Margin-40.01-43.53
EBITDA Margin64.4456.38
Operating Margin23.3819.59
Sales Turnover0.510.5
Return on Assets4.443.42
Return on Equity18.3415.57
Debt Q2 FY14 Q2 FY13
Current Ratio0.340.41
Debt/Capital0.70.74
Interest Expense303.61332.05
Interest Coverage3.893.06


Share Data Q2 FY14 Q2 FY13
Shares outstanding (mil)351.39351.39
Div / share0.01.34
EPS1.431.44
Book value / share29.5326.81
Institutional Own % n/a n/a
Avg Daily Volume71943.035775.0

Valuation


SELL. HUANENG POWER INTERNATIONAL's P/E ratio indicates a significant discount compared to an average of 48.96 for the Independent Power Producers & Energy Traders industry and a significant discount compared to the S&P 500 average of 19.81. For additional comparison, its price-to-book ratio of 1.67 indicates a discount versus the S&P 500 average of 2.74 and a discount versus the industry average of 1.84. The price-to-sales ratio is well below both the S&P 500 average and the industry average, indicating a discount. Upon assessment of these and other key valuation criteria, HUANENG POWER INTERNATIONAL proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
HNP 9.10 Peers 48.96   HNP 2.92 Peers 9.38

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

HNP is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

HNP is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
HNP 9.27 Peers 25.64   HNP 0.77 Peers 0.34

Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth expectations.

HNP is trading at a significant discount to its peers.

 

Premium. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

HNP trades at a significant premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
HNP 1.67 Peers 1.84   HNP 29.42 Peers 32.61

Average. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

HNP is trading at a valuation on par with its peers.

 

Average. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

HNP is expected to keep pace with its peers on the basis of earnings growth.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
HNP 0.79 Peers 2.34   HNP 3.26 Peers 11.90

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

HNP is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

HNP significantly trails its peers on the basis of sales growth

 

 

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