Research On Huaneng Group Assets Operation Performance And Strategy Selection

The electricity is the fundamental and strategic industry in the country’s development.And there is no other technology that can substitute the electricity industry. So, it will be themain energy source in the global economic progress in the long term. And it has been playedan important role in the all aspects of the social life. Along with the uses of the new energyand the environmental technology, our life will witness a huge change and the electricityindustry will play a more and more significant role in the future. Enterprise is the most basiccomponent units of the electricity industry. As one of the five large state-owned powergeneration companies, Huaneng Group has both the feather of the traditional planed economyand the modern enterprise after the reform in2002.In the process of asset operation, Huaneng gains good condition in asset turnover.Despite the company’s stock liquidity and capital turnover remain at lower level; it is stillbeyond the average level of the whole industry. The company has high liquidity of receivableaccounts. In recent years, through centralized procurement of raw materials to controlproduction costs, and due to the national electricity market prices adjustment, HuanengGroup’s financial indicators, such as return on capital, return on assets and operating margins,continue to improve and it also improve the overall profitability of Huaneng Group. Thecompany has strong short-term solvency, interest coverage ratio, although the company’sEBITDA is above the safe level, the value decreased year by year, which shows the decliningof company’s ability to pay interest and long-term solvency. It should take the initiative toadjust and maintain its long-term solvency to promote better development of enterprises. Thenet profit increased year by year, but its operating profit growth is not stable. All these showthat the Huaneng Group’s future growth capacity is relatively weak and it needs to be adjustedfor industrial upgrading to improve its profitability, operational efficiency and future businessdevelopment capacity.This paper is divided into six portions and the main research contents each portion of areas follows:(1) Introduction. In the first part of the paper, we focus on the background, the significance, the method, the content and the possible new ideas of the paper, then the paperanalysis the relevant literatures about the enterprise financial strategy management.(2) Overview of China’s electric power industry and Huaneng Group. In the third part,the paper analyzes the general development of China electricity industry and the relevantcondition of Huaneng Group. In the development of China electricity industry, we focus onthe process of the development, the supply and the demand condition of the electricity, thebasic condition of the main five nation-owned electricity enterprises and the problem of theelectricity industry.(3) Huaneng asset management performance analysis. In the fourth part, based on thefinancial data of Huaneng Group in2010and2012, the paper analyzes the capacity of running,making profits, paying back and development.(4) Huaneng asset management strategic selection. In the fifth part, the paper conduct aSWOT analysis based on its own strengths weakness, opportunity and threat. And based onthe SWOT analysis, we make the enterprise financial strategy for the Huaneng Group. Theconcrete strategies include the investment strategy, the financing strategy and the cost controlstrategy.(5) Conclusions and policy recommendations. In the last part, we conclude the aboveanalysis and propose the relevant advices for the future development of Huaneng Group. Itincludes strengthen the risk controls of company finance, improving the comprehensivecapacity of the financial staff and conducting the information oriented reform in the enterprisefinancial management.