GUOTAI HAITONG SECURITIES·2025-05-29 07:06Investment Rating - The report maintains an "Overweight" rating for the utility sector [5][8]. Core Insights - Northern thermal power shows significant earnings growth, while hydropower maintains stable profitability. Green energy faces pressure on performance due to dual impacts of wind conditions and electricity prices, while nuclear power profitability is affected by electricity pricing [3][5]. Summary by Sections Thermal Power - The report highlights that the cost side has improved significantly, leading to high earnings growth in northern thermal power. By Q1 2025, national thermal power companies continue to see profit growth, with northern plants outperforming southern ones. The median net profit growth rate for thermal power sample companies in Q1 2025 is 8% [12][14]. - The PE valuation for thermal power companies has been declining, with median PE ratios at 15.7, 12.9, and 10.4 for Q1 2023, Q1 2024, and Q1 2025 respectively. This decline is attributed to market skepticism regarding the sustainability of future earnings improvements [13][15]. - The report anticipates a recovery in thermal power company performance in Q2 2025 following a significant drop in electricity generation due to a warm winter [17]. Hydropower - Hydropower companies have shown stable earnings growth, with a median profit growth rate of 26% in Q1 2025, primarily driven by optimized water storage and dispatching [22][23]. - The PE valuation for hydropower companies peaked in 2024 and has since declined, with median PE ratios of 16.7, 18.8, and 18.1 for Q1 2023, Q1 2024, and Q1 2025 respectively. The report notes that leading companies with stable earnings and increased dividends have seen improved valuations [24]. Green Energy - Green energy companies are experiencing pressure on profitability, with median net profit growth rates of -12% and -4% for 2024 and Q1 2025 respectively. The sector is currently in a state of revenue growth without profit growth due to declining electricity prices and poor wind conditions [5][8]. - The report forecasts a recovery in green energy company performance in 2025, with an expected median net profit growth rate of around 12% [5]. Nuclear Power - The nuclear power sector is facing profitability challenges due to declining market electricity prices. The report notes that the two major listed companies, China General Nuclear Power and China National Nuclear Power, have shown differing performances, with the former experiencing slight profit growth due to new operational units, while the latter faces significant profit declines due to accounting policy changes [5][8].