Minsheng Securities·2025-05-18 06:43Investment Rating - The report maintains a "Recommended" rating for several companies including Funiu Co., China Nuclear Power, and Huaneng Water Power, while providing a "Cautious Recommendation" for others like China General Nuclear Power and Longyuan Power [5][25]. Core Insights - The electricity sector has shown weaker performance compared to the broader market, with the public utility sector index rising only 0.08% and the electricity sub-sector rising 0.06% during the week [1][10]. - The introduction of a pricing mechanism for electricity in Guangdong aims to enhance the competitive landscape for new energy projects, with a cap on the mechanism electricity proportion set at 90% [2][26]. - The Northeast region is enhancing its auxiliary service rules, which will officially start trial operations on July 1, 2025, aiming to improve the efficiency of the auxiliary service market [3][30]. Summary by Sections Market Performance - The public utility sector index closed at 2,379.01 points, with a slight increase of 1.80 points, while the electricity sub-sector closed at 3,173.84 points, up by 1.93 points, both underperforming compared to the Shanghai and Shenzhen 300 index [1][10]. - Within the electricity sub-sector, photovoltaic generation increased by 1.25%, while wind, thermal, and fire generation saw declines [1][16]. Investment Recommendations - The report suggests that the decline in coal prices will benefit thermal power companies, with expected steady growth in Q1 performance and potential for continued improvement in the upcoming quarters [4][22]. - It highlights stable performance for large hydropower companies, which maintain a dividend yield advantage in a declining interest rate environment [4][24]. - Specific companies to watch include Funiu Co., JianTou Energy, and Gansu Energy for thermal power, and Changjiang Power and ChuanTou Energy for hydropower [4][22]. Regulatory Developments - Guangdong's new pricing mechanism for electricity will involve competitive bidding for new energy projects, with a focus on projects that will be operational by the end of 2025 [2][26]. - The Northeast's auxiliary service market is expanding, with 16 provinces establishing peak regulation markets and 15 provinces establishing frequency regulation markets by 2024 [3][30]. Company Performance Forecasts - Key company forecasts indicate that China Nuclear Power is expected to have an EPS of 0.46 in 2024, with a PE ratio of 21, while Funiu Co. is projected to have an EPS of 1.07 with a PE of 9 [5][25]. - The report emphasizes the importance of monitoring companies involved in asset restructuring and mergers, as these are supported by policy directions [23].