BofA Securities has released a research report noting that management at Huaneng Power International Inc (00902) highlighted persistently high fuel costs during the first-half earnings call, while offering limited commentary on the electricity price outlook. This provides no substantive support for a near-term earnings inflection point.

The firm indicates that due to a high comparison base from the previous year, third-quarter coal-fired power earnings are projected to decline nearly 60% year-on-year, compared to a 52% drop in the second quarter. BofA has trimmed its earnings forecasts for Huaneng for 2026 to 2027 by an average of approximately 4%, lowering the H-share target price from HK$5 to HK$4.9, and the A-share (600011) target from RMB 6.3 to RMB 6. The bank reiterates its "underperform" ratings on both the A and H shares.

BofA expects Huaneng's unit fuel costs in the second half to rise 7% year-on-year, contrasting with a 3% decline in the first half. Each 1% change in costs would impact roughly 8% of net profit in 2026. On electricity pricing, the bank anticipates the year-on-year decline in coal-fired power tariffs will widen to RMB 0.025 per kilowatt-hour in the second half.