Core Insights - The public utility sector is experiencing fluctuations in electricity prices and coal prices, with a notable decrease in electricity procurement prices year-on-year and an increase in coal prices week-on-week [1][3] - The performance of Jintou Energy in Q3 2025 is highlighted, showing significant profit growth due to favorable conditions in the coal market and increased electricity demand during peak summer [2] - The National Development and Reform Commission (NDRC) has introduced initiatives to boost electric vehicle charging infrastructure, indicating potential investment opportunities in this sector [2] Electricity and Coal Prices - In August 2025, the electricity procurement price decreased by 2% year-on-year but increased by 1.3% month-on-month [1][3] - As of October 17, 2025, the price of thermal coal at Qinhuangdao was 748 RMB per ton, reflecting a week-on-week increase of 39 RMB per ton [1][3] Electricity Consumption and Generation - Total electricity consumption from January to July 2025 reached 5.86 trillion kWh, representing a year-on-year increase of 4.5% [1][3] - Cumulative electricity generation during the same period was 5.47 trillion kWh, with a year-on-year growth of 1.3% [1][3] - Different energy sources showed varied performance: thermal power and hydropower decreased by 1.3% and 4.5% respectively, while nuclear, wind, and solar power increased by 10.8%, 10.4%, and 22.7% respectively [1][3] Investment Opportunities - The report suggests focusing on undervalued thermal power assets and the growth potential of electric vehicle charging infrastructure [4] - Recommendations include investing in companies like Jintou Energy, Jingneng Power, and Datang Power for thermal power opportunities [4] - The charging pile equipment sector is highlighted with companies such as Teruid and Shenghong as potential investment targets [4] - Renewable energy assets, particularly solar and charging infrastructure, are expected to see a revaluation due to market dynamics [4]

Investment Rating - The report maintains a positive outlook on the power and gas sectors, highlighting potential investment opportunities in renewable energy and gas companies [3][12]. Core Insights - The report emphasizes the recent adjustments in value-added tax policies for wind and nuclear power, which may impact profitability in the short to medium term [10][11]. - It notes the significant drop in LNG import prices, reaching a four-year low, which could benefit gas companies and consumers [13][29]. - The report suggests that the competitive bidding results for electricity prices in Xinjiang and Gansu indicate varying strategies among renewable energy operators, which could lead to improved profit margins [9][12]. Summary by Sections 1. Power Sector - Xinjiang's competitive bidding results show a mechanism electricity price of 0.252 CNY/kWh for wind power, close to the upper limit, while Gansu's price is 0.1954 CNY/kWh, near the lower limit [5][9]. - The adjustment of the value-added tax policy for onshore wind power, effective November 1, 2025, will eliminate the 50% refund policy, while offshore wind will retain it until the end of 2027 [10][11]. - Recommendations include focusing on companies like Guodian Power, Sichuan Investment Energy, and China Nuclear Power due to their stable growth prospects [12]. 2. Gas Sector - The report highlights a slight decline in global gas prices, with the US Henry Hub price at $2.82/mmBtu, down 2.90% week-on-week, and LNG import prices in China dropping to 2852 CNY/ton, the lowest since mid-2021 [13][29]. - It suggests that the cost reduction in upstream resources and the recovery of the macro economy will benefit Hong Kong gas companies like Kunlun Energy and New Hope Energy [31]. - The report anticipates that the LNG prices may stabilize as demand increases with the onset of colder weather [29][31]. 3. Weekly Market Review - The public utility, power, gas, and environmental protection sectors outperformed the CSI 300 index during the week of October 13-17, 2025 [35]. - The report notes that the power equipment sector lagged behind the index, indicating potential investment opportunities in other sectors [35]. 4. Company and Industry Dynamics - The report discusses the upcoming competitive bidding for renewable energy projects in Anhui, with a bidding range set between 0.2 CNY/kWh and 0.3844 CNY/kWh [41][42]. - It highlights the performance of major companies, such as China General Nuclear Power and Longyuan Power, which reported varying results in their electricity generation [43][44].

Summary of Conference Call on China Electric Utilities Industry Overview - The conference call discusses the impact of VAT rebate cuts announced by the PRC's Ministry of Finance on the electric utilities sector, specifically focusing on wind and nuclear power industries [1][2]. Key Points on VAT Rebate Cuts - **VAT Rebate Cancellation**: - The 50% VAT rebate for onshore wind farms will be cancelled effective from November 1, 2025. Offshore wind power generation will see a similar cancellation starting January 1, 2028 [2]. - New nuclear units approved after October 31, 2025, will not be entitled to VAT rebates, while existing operational units will continue to receive rebates for a defined period [2]. Impact on Companies - **Longyuan Power Group**: - The VAT rebate cut is expected to reduce Longyuan's net profit by more than 5%, pending confirmation from the company [1][6]. - The company is currently assessing the financial impact of the VAT changes [3]. - **CGN Power**: - The VAT rebate cut will have a lesser impact on CGN Power as it primarily affects new nuclear units. The estimated reduction in net profit for new units is approximately Rmb20 million per annum in the 6th-10th years and Rmb50 million per annum in the 11th-15th years of operation [7]. - CGN Power's existing operational units will not be affected in the near term, specifically for the years 2025-2030 [7]. Financial Projections - **Valuation Models**: - CGN Power's target price is set at HK$2.60, based on a DCF model, with a WACC of 7.0% [8]. - Longyuan's target price is set at HK$7.00, also based on a DCF model, with a WACC of 7.6% [10]. - CNNP's target price is Rmb11.00, with a WACC of 6.7% [12]. Risks Identified - **Longyuan Power Group**: - Risks include unpredictable weather conditions affecting utilization rates, capacity additions, and potential tariff cuts [11]. - **CGN Power**: - Risks include lower-than-expected utilization, tariff reductions, and interest rate hikes [13]. Additional Insights - The VAT rebate changes are part of a broader policy affecting multiple industries, including financial leasing and coal bed methane extraction, indicating a significant shift in government policy towards renewable energy and its financial support [2]. - The conference call highlights the cautious outlook for both Longyuan (Neutral) and CGN Power (Sell) due to anticipated net profit cuts year-over-year in 2025 [1]. This summary encapsulates the critical insights from the conference call regarding the implications of VAT rebate cuts on the electric utilities sector in China, particularly focusing on Longyuan and CGN Power.

Summary of Longyuan Power Conference Call Company Overview - Longyuan Power is a subsidiary of China Energy Group, focusing on wind power, with a wind power installed capacity ratio of 73% and solar power at 27% [2][5][9] - The company has maintained a long-term Return on Equity (ROE) of 8%-9% since 2011, but has faced pressure on electricity prices and competition from thermal power, leading to a decline in revenue per kilowatt-hour [2][5] Industry Context and Valuation - The renewable energy industry is experiencing favorable policies, with a notable increase in new installed capacity since July 2025 [3] - Longyuan Power's price-to-book (PB) ratio has fluctuated significantly, dropping from 2.34 in September 2021 to a historical low of 0.52 in February 2024, and currently recovering to 0.85 [3][7] - The company is expected to benefit from industry valuation recovery due to its first-mover advantage and competitive pricing post the implementation of Document 136 [3][7] Financial Performance - As of mid-2025, Longyuan Power's accounts receivable stood at 49.5 billion yuan, accounting for 56% of net assets, with annual state subsidies expected to be between 12-13 billion yuan [4][11] - The price of green certificates has rebounded to 5.7 yuan per certificate, a 23% year-on-year increase, with trading volumes for green certificates and green electricity rising by 100%-200% [4][13] Asset and Project Pipeline - Longyuan Power's current operational capacity includes 31.4 GW of wind power and 11.8 GW of solar power, with plans to add 5 GW of new capacity in 2025 [8][9] - Future growth is anticipated from the injection of 4 GW of green power projects from the parent group, upgrades of old equipment, and a strong pipeline of offshore wind and large-scale projects [2][8] Market Dynamics - The marketization of electricity pricing has led to wind power prices being higher than solar power prices, benefiting Longyuan Power as a major wind power competitor [10] - The company has a competitive edge due to its internal synergies and the alignment of its renewable energy projects with its thermal power operations [10] Future Profitability and Projections - Longyuan Power's projected net profits for 2025-2027 are 2.43 billion yuan, 7.22 billion yuan, and 7.93 billion yuan, reflecting growth rates of 0%, 12%, and 10% respectively [14] - Despite short-term performance pressures, the overall trend for the company is positive, with expectations for gradual recovery in the green energy sector [14]

Market Review - The Shanghai Composite Index decreased by 1.47% and the ChiNext Index fell by 5.71% during the week of October 13-17, 2025. The coal sector increased by 5.66%, while the public utility sector rose by 0.05%. The environmental protection sector declined by 0.97%, and the carbon neutrality sector dropped by 3.14% [1][12]. Industry Insights - The coal price is expected to rise due to continuous abnormal autumn rain affecting production, along with safety and environmental inspections limiting supply. Despite October being a traditional off-peak season, traders are preparing for winter storage needs, leading to accelerated coal price increases post-National Day [4][31]. - The electricity demand is anticipated to increase as the peak winter season approaches, with NOAA predicting a 71% chance of La Niña occurring from October to December, which may lead to a colder winter [4][33]. - The annual long-term electricity price for 2025 has been locked in, and the capacity price mechanism is expected to stabilize electricity prices in the coming months [4][33]. Investment Recommendations - For the thermal power sector, it is recommended to focus on companies with power generation assets located in regions with tight supply-demand dynamics and favorable competition, such as Anhui Energy and Huadian International [4][65]. - In the hydropower sector, attention is drawn to leading operators like Yangtze Power, which is expected to benefit from stable electricity prices and regional supply-demand tightness [4][65]. - In the nuclear power sector, China National Nuclear Power is highlighted as a key player due to the expected increase in electricity generation and stable pricing [4][65]. - For renewable energy, the focus is on leading wind power operator Longyuan Power [4][65]. - In the environmental protection sector, the recommendation is to pay attention to urban comprehensive operation management service providers like Yuhua Tian [4][65]. Industry News - On October 15, 2025, Weiqiao Group announced the integration of its self-built power plant into the national grid, marking a significant shift towards collaboration and green transformation [4][59]. - The Gansu Electric Power Investment Company completed the commissioning of the largest million-kilowatt coal-fired power plant in the country, with a total installed capacity of 6 million kilowatts and an expected annual electricity generation of 33 billion kilowatt-hours [4][59]. - The National Development and Reform Commission issued a management method to support energy-saving and carbon reduction projects, including green methanol and sustainable aviation fuel production [4][60].

Core Points - The recent expansion of CCER methodologies from 4 to 13 indicates a significant shift towards including high-carbon to low-carbon transition areas, such as building energy efficiency and agricultural waste management [1][2][3] - Companies like Longyuan Power and Yueyang Forest Paper view the accelerated growth of the CCER market as an opportunity to diversify their business and enhance China's influence in global carbon governance [1][2] - The release of the fifth batch of methodologies aligns with national policies aimed at promoting green and low-carbon transitions, as well as external pressures from the EU's Carbon Border Adjustment Mechanism (CBAM) set to be implemented in January 2026 [1][5] Summary by Sections CCER Market Expansion - The Ministry of Ecology and Environment has released a total of 15 CCER methodologies this year, indicating a rapid expansion of the market [2][3] - The expansion signifies a transition from pilot projects to a more mature market that covers the entire industry chain [2][3] Company Responses - Longyuan Power has established a specialized carbon asset management company to handle CCER project development and trading, viewing it as an additional value to their clean energy business [3][4] - Yueyang Forest Paper sees CCER as a strategic tool for business transformation, aiming to integrate carbon asset development with traditional operations to enhance profitability [4][5] Challenges and International Integration - Experts caution that while the CCER market is expanding, it still faces challenges in meeting international standards, particularly regarding project verification and data transparency [6][7] - The current methodologies may not yet be ready for international carbon trading under the Paris Agreement due to differences in certification standards and the need for dynamic updates [6][7]

Core Viewpoint - Longyuan Power Group Co., Ltd. is experiencing a decline in stock price and trading volume, indicating potential market challenges ahead [1][5]. Company Overview - Longyuan Power primarily engages in wind and solar power generation, with its main products being electricity and heat [2][4]. - The company has signed a cooperation framework agreement with the People's Government of Tieli City, Heilongjiang Province, to develop a 3.53 million kilowatt new energy power generation project [2]. - Longyuan Power has an operational wind power capacity of 1.5908 million kilowatts in Xinjiang [3]. Financial Performance - For the first half of 2025, Longyuan Power reported operating revenue of 15.657 billion yuan, a year-on-year decrease of 17.09%, and a net profit attributable to shareholders of 3.375 billion yuan, down 11.82% year-on-year [9]. - The company has distributed a total of 5.978 billion yuan in dividends since its A-share listing, with 4.746 billion yuan distributed over the past three years [10]. Shareholder and Institutional Holdings - As of June 30, 2025, the number of shareholders increased to 41,000, with an average of 0 circulating shares per person [9]. - Major institutional shareholders include Hong Kong Central Clearing Limited and various ETFs, with notable increases in holdings among several funds [11]. Market Activity - On October 17, Longyuan Power's stock fell by 2.15%, with a trading volume of 93.516 million yuan and a turnover rate of 0.10% [1]. - The stock's average trading cost is 16.69 yuan, with the current price approaching a resistance level of 17.92 yuan, indicating potential for a price correction if this level is not surpassed [7].

Core Viewpoint - Longyuan Power (00916.HK) announced that it will hold a board meeting on October 29, 2025, to review and approve the quarterly performance for the nine months ending September 30, 2025, and to release the performance announcement [1] Summary by Category - Company Announcement - Longyuan Power will conduct a board meeting on October 29, 2025, to discuss the quarterly results [1] - The meeting will focus on the performance of the company and its subsidiaries for the nine months ending September 30, 2025 [1]

格隆汇10月17日丨龙源电力(00916.HK)公告，公司将于2025年10月29日(星期三)举行董事会会议，以审 议及批准(其中包括)公司及其附属公司截至2025年9月30日止9个月的季度业绩及发布该业绩公告。 ...

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