Summary of Earnings Preview for China Utilities Sector Industry Overview - The report focuses on the **China Utilities** sector, specifically highlighting the **Power, Renewables, and Power Grid** industries in the Asia Pacific region - The overall industry view is considered **Attractive** [4][6] Key Insights - **3Q25 Earnings Expectations**: - Continued margin recovery is anticipated for wind component and submarine cable players - Polysilicon earnings may see upside risks - Solar module producers are expected to maintain flat or show mild decline in losses quarter-over-quarter (QoQ) [1][6] - **Coal Prices and Power Tariffs**: - A slight weakening in unit profit is expected due to a small rise in coal prices and a persistently soft power tariff [6][8] - **Sector Performance**: - Wind sector is expected to see a sector-wide gross profit (GP) margin recovery, primarily driven by submarine cables with a favorable product mix in 3Q25 - Wind Turbine Generator (WTG) Original Equipment Manufacturers (OEMs) may experience a more muted recovery [6][8] Company-Specific Highlights - **CGN Power Co., Ltd (1816.HK)**: - On-grid power generation decreased by 3% year-over-year (YoY) in 3Q25 due to longer outage times - Estimated net profit of approximately **Rmb2.6 billion**, down 6% YoY [8][10] - **China Longyuan Power Group (0916.HK)**: - Forecasted net profit of **Rmb937 million** in 3Q25, down from **Rmb1,542 million** in 2Q25 - Net profit for 9M25 expected to be **Rmb4.5 billion**, down 22% YoY [8][10] - **Huaneng Power International Inc. (0902.HK)**: - Estimated net profit of **Rmb4.1 billion**, up approximately 38% YoY but down 5% QoQ - Unit fuel cost expected to decline by **Rmb0.036/kWh** (12% YoY) [8][10] - **Jiangsu Zhongtian Technology Co. Ltd. (600522.SS)**: - Forecasted net profit of **Rmb1.03 billion** for 3Q25, up 21.1% YoY and 9.6% QoQ [8][10] - **Goldwind (2208.HK)**: - Expected net profit of **Rmb953 million**, representing a 135.1% YoY increase [10][10] - **Tongwei Co. Ltd. (600438.SS)**: - Forecasted net loss of **Rmb2.2-2.4 billion** in 3Q25, with improvements in polysilicon business due to price rebounds [10][10] - **LONGi Green Energy Technology Co. Ltd. (601012.SS)**: - Expected loss of **Rmb1.0-1.3 billion** in 3Q25, with slight declines in wafer and module shipments [10][10] Additional Observations - **Polysilicon Players**: Potential earnings surprises are anticipated due to increases in shipments and average selling prices (ASP) in 3Q25 [6][8] - **Demand Outlook**: Weaker demand is expected in 4Q25 compared to 3Q25, particularly for solar products [6][8] This summary encapsulates the key points from the earnings preview for the China Utilities sector, highlighting both the overall industry outlook and specific company forecasts.

Group 1 - In the third quarter, northbound capital experienced a net outflow of approximately 159.3 billion, with significant selling in cyclical sectors such as banking and non-bank financials, while technology sectors like electronics and automotive saw inflows [4][9][10] - The top three sectors for northbound capital inflows were electronics (27.8 billion), automotive (19.1 billion), and electric equipment (13.1 billion), while the largest outflows were from banking (-60 billion), non-bank financials (-36.3 billion), and food and beverage (-32.8 billion) [4][10] - Notable individual stocks with the highest net purchases included BYD (17.8 billion), CATL (16.6 billion), and Northern Huachuang (14.2 billion), while the most sold stocks were Kweichow Moutai (-17.2 billion), Changjiang Electric Power (-12.5 billion), and Agricultural Bank of China (-10.9 billion) [4][12] Group 2 - The liquidity indicators showed a net inflow of 250.1 billion in ETFs, while financing capital turned to a net outflow of 128.1 billion, indicating a shift in market sentiment [3][28] - The issuance of public funds increased by 5.73 billion, reflecting a strong demand for equity investments despite the overall market conditions [3][28] - The market sentiment was characterized by a decrease in trading activity for financing funds, with the proportion of financing transactions in A-share trading declining to 12.4% [38][40] Group 3 - The sectors that attracted significant net inflows included non-ferrous metals, banking, and non-bank financials, with inflows of 61.5 billion, 85.9 billion, and 60 billion respectively [48][49] - Conversely, sectors such as telecommunications, basic chemicals, and transportation experienced notable net outflows [48][49] - The individual stocks with the highest net purchases in financing included Zijin Mining (+1.58 billion), Zhongjin Gold (+0.78 billion), and Beijing Junzheng (+0.75 billion), while the largest net sales were from Xinyi Semiconductor (-2.48 billion), Industrial Fulian (-1.02 billion), and Ping An Insurance (-0.81 billion) [50]

Investment Rating - The report maintains an "Outperform" rating for the public utility and environmental sectors [1][5][9]. Core Views - The report highlights the adjustment of value-added tax policies for renewable energy, particularly wind and nuclear power, which is expected to support the profitability of these sectors [3][18][19]. - The report emphasizes the ongoing government support for renewable energy development, indicating a gradual stabilization in profitability for new energy generation [4][29]. - The report suggests that the decline in coal and electricity prices may allow thermal power companies to maintain reasonable profit levels [4][29]. Summary by Sections Market Review - The Shanghai Composite Index fell by 2.22%, while the public utility index decreased by 0.69% and the environmental index dropped by 1.11% [1][15]. - Among the sub-sectors, thermal power decreased by 0.82%, hydropower increased by 1.69%, and new energy generation fell by 1.85% [1][15]. Important Events - The National Development and Reform Commission released a draft on renewable energy consumption targets, which includes both electricity and non-electric consumption minimum ratios [2][16]. - The government announced support for green methanol and sustainable aviation fuel projects, with funding covering up to 80% of project costs in certain regions [17]. Investment Strategy - Recommendations include major thermal power companies like Huadian International and Shanghai Electric, as well as leading renewable energy firms such as Longyuan Power and Three Gorges Energy [4][29]. - The report also suggests focusing on stable dividend-paying hydropower stocks like Yangtze Power and gas companies with trade capabilities like Jiufeng Energy [4][29]. Key Company Earnings Forecasts and Investment Ratings - Huadian International: Outperform, EPS forecast for 2024A at 0.49 and 2025E at 0.62 [9]. - Longyuan Power: Outperform, EPS forecast for 2024A at 0.76 and 2025E at 0.81 [9]. - China Nuclear Power: Outperform, EPS forecast for 2024A at 0.43 and 2025E at 0.50 [9]. Environmental Sector Insights - The water and waste incineration sectors are entering a mature phase, with improved free cash flow and lower risk preferences among investors [30]. - The domestic scientific instrument market presents significant opportunities for domestic replacements, with a market size exceeding $9 billion [30].

Group 1 - The China Central Enterprises Innovation-Driven Index has risen by 1.50%, with significant increases in constituent stocks such as PetroChina Oilfield Services up by 10.05% and China Railway Construction Heavy Industry up by 7.14% [3] - The Central Enterprises Innovation-Driven ETF (515900) has increased by 1.53%, with a latest price of 1.59 yuan, and has shown a cumulative increase of 1.23% over the past month, ranking 1/4 among comparable funds [3] - The trading volume of the Central Enterprises Innovation-Driven ETF was 587.53 million yuan, with a turnover rate of 0.17% [3] Group 2 - China Shipbuilding Industry Corporation expects a net profit attributable to shareholders of 5.55 billion to 6.15 billion yuan for the first three quarters of 2025, representing a year-on-year increase of 104.30% to 126.39% [4] - China CNR Corporation plans to hold a board meeting on October 30 to consider and approve its performance for the first three quarters, having signed significant contracts totaling approximately 54.34 billion yuan, which is about 22% of its expected revenue for 2024 [4] - The average daily trading volume of the Central Enterprises Innovation-Driven ETF over the past year was 20.23 million yuan, ranking first among comparable funds [4] Group 3 - The Central Enterprises Innovation-Driven Index evaluates the innovation and profitability quality of listed central enterprises, selecting 100 representative companies to reflect the overall performance of innovative central enterprises [5] - As of September 30, 2025, the top ten weighted stocks in the index include China Shipbuilding, Hikvision, and China Southern Power Grid, accounting for 36.04% of the total index weight [5] - The Central Enterprises Innovation-Driven ETF has seen a significant increase in scale, growing by 13.42 million yuan over the past three months, ranking 1/4 among comparable funds [4][5]

Investment Rating - The report provides a "Buy" rating for several companies in the power and gas sectors, indicating a positive outlook for their performance [41]. Core Insights - The report highlights the recent adjustments in the value-added tax (VAT) policies for wind and nuclear power, which may impact profitability for operators in these sectors [9][10]. - It notes the competitive pricing results for electricity in Xinjiang and Gansu, with Xinjiang's prices nearing the upper limit of the bidding range, suggesting a favorable environment for renewable energy operators [8]. - The report discusses the decline in global LNG prices, with China's comprehensive LNG import price reaching a four-year low, which could benefit domestic gas companies [12][27]. Summary by Sections 1. Power Sector - Xinjiang's mechanism electricity bidding results show a scale of 36 billion kWh for solar and 185 billion kWh for wind, with prices at 0.235 CNY/kWh and 0.252 CNY/kWh respectively, indicating a competitive market [5][8]. - The VAT policy changes will eliminate the 50% VAT refund for onshore wind from November 1, 2025, while maintaining it for offshore wind until the end of 2027 [9][10]. - Recommendations include focusing on companies like Guodian Power, China Nuclear Power, and Longyuan Power due to their stable growth prospects [11]. 2. Gas Sector - Global gas prices have shown slight declines, with the US Henry Hub price at $2.82/mmBtu, reflecting a 2.90% weekly drop [12][15]. - China's LNG import price has dropped to 2852 CNY/ton, the lowest since mid-2021, driven by lower oil prices affecting long-term contracts [27][29]. - The report suggests a positive outlook for gas companies like Kunlun Energy and New Hope Energy, as cost reductions and economic recovery may enhance profitability [29]. 3. Environmental Sector - The report emphasizes the benefits of debt-for-equity swaps and the increasing stability of returns for green energy operators, recommending companies like China Everbright Environment and Hongcheng Environment [11]. - It highlights the ongoing rise in SAF (Sustainable Aviation Fuel) prices, suggesting investment opportunities in related companies [11]. 4. Key Company Valuations - The report includes a valuation table for key companies, with several rated as "Buy," indicating strong expected performance in the coming years [41].

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].

Investment Rating - The report maintains an "Overweight" rating for the utility sector, specifically recommending investment in JianTou Energy and other undervalued thermal power assets, as well as opportunities in charging stations and photovoltaic sectors [1]. Core Insights - JianTou Energy's Q3 2025 performance is highlighted, with a projected net profit of approximately 1.583 billion yuan, representing a year-on-year increase of 232%. The Q3 net profit alone is expected to be around 686 million yuan, a staggering increase of 566% year-on-year [4]. - The National Development and Reform Commission (NDRC) has issued a plan to double the service capacity of electric vehicle charging facilities by 2027, aiming to establish 28 million charging facilities nationwide [4]. - The NDRC has also released a draft for implementing minimum renewable energy consumption targets, which will enhance the share of renewable energy in electricity consumption through various means [4]. Industry Data Tracking - **Electricity Prices**: In August 2025, the average grid purchase price decreased by 2% year-on-year but increased by 1.3% month-on-month, averaging 388 yuan/MWh [39]. - **Coal Prices**: As of October 17, 2025, the price of thermal coal at Qinhuangdao was 748 yuan/ton, reflecting a year-on-year decrease of 10.95% but a week-on-week increase of 39 yuan/ton [44][45]. - **Water Conditions**: The water level at the Three Gorges Reservoir was 170.55 meters as of October 17, 2025, with inflow and outflow rates increasing by 48.15% and 102.78% year-on-year, respectively [53]. - **Electricity Consumption**: From January to July 2025, total electricity consumption reached 5.86 trillion kWh, a year-on-year increase of 4.5% [14]. - **Power Generation**: The cumulative power generation from January to July 2025 was 5.47 trillion kWh, with a year-on-year increase of 1.3%. Thermal and hydropower generation saw declines of 1.3% and 4.5%, respectively [22]. - **Installed Capacity**: As of the first half of 2025, new installed capacity for thermal power was 25.78 million kW, a year-on-year increase of 41.3% [47]. Investment Recommendations - **Thermal Power**: Focus on undervalued thermal power investments, particularly in the Beijing-Tianjin-Hebei region, with recommendations for JianTou Energy, Jingneng Power, and Datang Power [4]. - **Charging Station Equipment**: Suggested investments in companies like Teruid and Shenghong Co., Ltd. [4]. - **Photovoltaic and Charging Station Assets**: Potential for value reassessment in photovoltaic and charging station assets due to market dynamics [4]. - **Green Energy**: Emphasis on the recovery of asset quality and growth potential in green energy, with recommendations for Longyuan Power, Zhongmin Energy, and others [4]. - **Hydropower**: Highlighting the low cost and strong cash flow of hydropower, with recommendations for Changjiang Power [4]. - **Nuclear Power**: Continued growth in nuclear power with recommendations for China Nuclear Power and China General Nuclear Power [4].

Group 1 - The A500ETF by Jiashi has a turnover rate of 2.23% and a transaction volume of 262 million yuan, with a total scale reaching 11.624 billion yuan [3] - Over the past five trading days, the A500ETF has seen net inflows on three days, totaling 149 million yuan, indicating strong investor interest [3] - As of October 17, 2025, the A500ETF has achieved a net value increase of 24.41% over the past year, with the highest monthly return since inception being 11.71% [3] Group 2 - The top ten weighted stocks in the CSI A500 index as of September 30, 2025, include Ningde Times, Kweichow Moutai, and China Ping An, collectively accounting for 19% of the index [4] - The weightings of the top stocks are as follows: Kweichow Moutai at 3.87%, Ningde Times at 2.89%, and China Ping An at 2.60% [6] - Investors without stock accounts can access the A500ETF Jiashi through the A500ETF Jiashi linked fund (022454) for exposure to the top 500 A-share companies [6]

Investment Rating - The report maintains a "Buy" rating for the power sector, emphasizing the potential for upward performance in specific stocks [5][9]. Core Insights - The report highlights that Q3 performance for thermal power is improving, with coal prices rebounding, which enhances expectations for stable electricity prices. The average coal price at ports was 673 RMB/ton in Q3, down 180 RMB/ton year-on-year, but has recently increased to 739 RMB/ton [5][14]. - Hydropower is expected to benefit from improved autumn rainfall, with significant increases in inflow and outflow at the Three Gorges Dam, showing a 48.15% and 102.78% year-on-year increase respectively [5][14]. - Adjustments in tax policies for wind and nuclear power are noted, with offshore wind power receiving a 50% VAT refund policy from November 1, 2025, while onshore wind will no longer enjoy VAT refunds [3][4][14]. Summary by Sections Industry Overview - The Shanghai Composite Index fell by 1.47% and the CSI 300 Index decreased by 2.22% during the week of October 13-17, 2025. The CITIC Power and Utilities Index decreased by 0.43%, outperforming the CSI 300 by 1.79 percentage points [5][63]. Thermal Power - Q3 results for thermal power are on an upward trend, with a notable increase in expected profits for companies like Jiantou Energy, which anticipates a 232% increase in net profit [5][14]. - The report emphasizes the importance of coal price stability for maintaining electricity price expectations for 2026 [5][14]. Hydropower - The report notes significant improvements in hydropower due to favorable autumn rainfall, with a focus on the increased inflow and outflow at the Three Gorges Dam [5][14]. Wind and Nuclear Power - The report discusses the new tax policies affecting wind and nuclear power, highlighting the competitive advantage of offshore wind power due to the new VAT refund policy [3][4][14]. Key Stocks - The report recommends focusing on specific stocks within the thermal power sector, including Huaneng International, Huadian International, and others, as well as emphasizing the value of hydropower investments [5][9].