CYPC(SH:600900) Shanxi Securities·2025-02-26 11:59Investment Rating - The report maintains an investment rating of "A" for the electricity and utilities sector, indicating a positive outlook for the industry in 2025 [1]. Core Insights - The report identifies two major trends for 2025: the acceleration of the electricity spot market and the ongoing mergers and acquisitions (M&A) within state-owned power enterprises [4][30]. - The electricity demand is expected to recover, with a projected national electricity consumption of 10.4 trillion kilowatt-hours in 2025, representing a year-on-year growth of approximately 6% [8]. Summary by Sections 1. Industry Performance Overview - In 2024, the electricity index experienced overall fluctuations, with a year-to-date increase of 13.80% [19]. - The electricity consumption from January to November reached 89,686 billion kilowatt-hours, showing a year-on-year growth of 7.1% [21]. 2. 2025 Outlook - The report emphasizes the importance of the electricity spot market and M&A activities as key trends for 2025 [30]. - The construction of a unified national electricity market is expected to be completed by 2029, enhancing resource allocation and reducing costs [31]. 3. Thermal Power Sector - The thermal power sector is anticipated to benefit from improved cost conditions and the advantages of coal-electricity integration, with companies like China Shenhua and Huaihe Energy actively expanding their projects [5]. - The introduction of auxiliary services and capacity pricing is expected to enhance the stability of thermal power revenues [5]. 4. Hydropower Sector - The hydropower sector is projected to benefit from declining depreciation and financial costs, leading to improved profitability [6]. - Hydropower companies are expected to maintain high dividend payout ratios, with commitments from major players like Yangtze Power and Guotou Power [6]. 5. Investment Recommendations - The report suggests focusing on state-owned enterprise M&A, low-interest rate benefits, and coal-electricity integration as primary investment themes for 2025 [8]. - Key companies to watch include Anhui Energy, Shenergy, and Jiangsu Power, which are positioned to benefit from regional advantages and restructuring activities [9].