SGP(SH:603586) Xin Lang Zheng Quan·2025-12-01 06:08Core Viewpoint - The recent revisions to the pricing and cost auditing methods for electricity transmission and distribution aim to enhance the regulatory framework, promote the consumption of renewable energy, and potentially lower electricity prices while ensuring reasonable returns for grid companies [2][5]. Group 1: Regulatory Changes - The National Development and Reform Commission has revised four key pricing methods to improve the regulatory system for electricity transmission and distribution [2]. - New standards for loan interest rates will more accurately reflect the actual financing costs of grid companies [2]. - The revised methods will allow for adjustments in the return on equity for provincial grid companies to ensure balanced development and fair pricing across regions [3]. Group 2: Pricing Mechanisms - The new regulations propose a single capacity pricing mechanism for projects that facilitate the nearby consumption of renewable energy, clarifying the responsibilities of grid companies, power generation companies, and users [3]. - The synchronization of cost audits for cross-provincial and regional projects aims to enhance efficiency in cost and price regulation [4]. - The sharing of transmission revenue from actual line loss rates will now be handled monthly, allowing for more dynamic adjustments based on performance [4]. Group 3: Investment Recommendations - The report recommends focusing on high-quality thermal power operators such as Huaneng International, Datang Power, and China Power, as well as hydropower companies like Yangtze Power and Guotou Power [5]. - The investment outlook for the thermal power sector is optimistic due to expected increases in capacity pricing and the potential for revaluation of thermal assets [8]. - The report highlights the importance of national thermal power enterprises over regional ones, citing better profit distribution and growth potential [9]. Group 4: Market Sentiment and Performance - The public fund's heavy holdings in the utility sector have reached a historical low, indicating a potential undervaluation and opportunity for investment [11][12]. - The thermal power sector has seen a decrease in holdings due to market risk appetite shifting towards more aggressive sectors, despite some companies still attracting institutional interest [12]. - The hydropower sector has experienced a decline in holdings, but long-term value remains strong, particularly for companies with attractive dividend yields [13]. Group 5: Sector-Specific Insights - The nuclear power sector has seen a decrease in holdings due to weak performance in mid-year reports and market sentiment, but its long-term value is expected to remain stable [14]. - The renewable energy sector has faced challenges, but there is a focus on undervalued companies with strong alpha characteristics, indicating a shift towards high-quality development [13].