Haitong Securities International·2025-04-10 08:31Investment Rating - The report suggests an increase in industry valuation due to the emphasis on market-based electricity pricing by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council [2][8]. Core Insights - The document highlights the shift towards market-based electricity pricing, which may alter the perception that the government will control price increases. This change is expected to positively impact the valuation of power companies [2][8]. - The report indicates that last year's electricity prices in four provinces showed mixed results, with potential for price stability or increases in the coming year. This has led to a surge in power stocks, particularly benefiting coastal new energy companies [2][8]. - Hydropower companies can now obtain green certificates, which is advantageous for both new and existing projects. The trading price in Shaanxi exceeds the benchmark, while the Northeast region imposes limits on peak regulation, affecting new energy prices [3][8]. - In Q1, significant drops in coal prices were observed, alongside improvements in electricity prices, with a 12% year-on-year increase in water inflow at the Three Gorges [4][8]. - Future expectations include stable electricity prices and a widening coal-electricity price spread, with Q1 2025 earnings anticipated to rise. The report notes that thermal power currently has a low PE ratio and increasing dividends, making it an attractive investment [4][8]. Summary by Sections - Market Dynamics: The emphasis on market-based pricing is expected to enhance the valuation of electricity companies, with a notable impact on stock performance [2][8]. - Hydropower Developments: The ability to obtain green certificates for hydropower projects is a significant development, benefiting the sector [3][8]. - Coal and Electricity Pricing: The report discusses the fluctuations in coal prices and their impact on electricity pricing, indicating a potential for improved profitability in the thermal power sector [4][8]. - Investment Opportunities: Beneficiaries identified include various thermal power companies, hydropower firms, and new energy companies, suggesting a diversified investment approach within the sector [4][8].