电改持续深化，电力设备需求有望延续高景气

Core Viewpoint - The investment strategy for the power industry in 2026 indicates a stable growth in electricity demand, with a projected total electricity consumption of 10.37 trillion kilowatt-hours in 2025, reflecting a year-on-year increase of 5.0%. The supply-demand dynamics are expected to show a "wide electricity volume, tight electricity power" pattern during the 14th Five-Year Plan period, with comprehensive electricity prices likely stabilizing [1][2]. Industry Review - The overall performance of the A-share dividend style sector is expected to be poor in 2025, while electricity demand continues to grow steadily [2]. Power Sector Analysis - Thermal Power: The profitability of thermal power in northern regions is expected to improve year-on-year, while profitability in southeastern coastal areas remains under pressure. The annual long-term contract prices for thermal power in Jiangsu and Zhejiang are projected to decrease by 68.26 and 67.54 yuan per megawatt-hour, respectively. Capacity prices are anticipated to cover fixed costs of coal power, contributing to stable profits [3]. - Hydropower: Major hydropower companies are expected to operate steadily, with a widening spread between hydropower dividend yields and government bond yields starting from the second half of 2024. The average net interest margin for hydropower from early 2025 to the present has expanded by 71 basis points compared to the average from mid-2023 to mid-2024 [3]. - Nuclear Power: The price of nuclear power in Guangdong is expected to stabilize, with the cancellation of the variable cost compensation mechanism. However, the decline in electricity prices in Jiangsu is projected to impact China Nuclear Power's net profit by approximately 800 million yuan in 2026 [3]. - Green Power: The introduction of policy uncertainties in revenue streams for green power is noted, with the wind power pricing being generally higher than that of photovoltaic power. The wind power value-added tax subsidy is expected to decline, indicating a policy bottom [4]. Grid Equipment - The State Grid has announced a fixed asset investment of 4 trillion yuan during the 14th Five-Year Plan period, with high demand expected to continue globally. Domestic investment in grid equipment is expected to show differentiation, with significant increases in investment for transmission and transformation equipment [5]. Investment Opportunities - Thermal Power: Beneficiaries include Huaneng International, Huadian International, and China Resources Power among others [6]. - Hydropower: Key players include Yangtze Power, Huaneng Hydropower, and Guotou Power [6]. - Nuclear Power: Companies such as China Nuclear Power and China General Nuclear Power are highlighted [6]. - Green Power: Notable companies include Longyuan Power, China Power, and Datang New Energy [6]. - Grid Equipment: Companies like Pinggao Electric, XJ Electric, and China XD Electric are mentioned as potential beneficiaries [6].