Guoxin Securities·2026-02-06 01:20Investment Rating - The report maintains an "Outperform" rating for the public utility and environmental protection industry [1][4][7]. Core Views - The report highlights that coal and electricity prices are declining simultaneously, which is expected to maintain reasonable profitability for thermal power. It recommends large national thermal power companies such as Huadian International and Shanghai Electric, where regional electricity prices are relatively firm [3][29]. - Continuous government policies supporting renewable energy development are anticipated to lead to gradually stable profitability in renewable power generation. Recommended companies include national renewable energy leaders Longyuan Power and Three Gorges Energy, as well as regional offshore wind power companies like Guangxi Energy and Funiu Co., Ltd. [3][29]. - The growth in installed capacity and power generation is expected to offset the downward pressure on electricity prices, with nuclear power companies likely to maintain stable profitability. Recommended companies include China National Nuclear Power and China General Nuclear Power [3][29]. - High-dividend hydropower stocks are highlighted for their defensive attributes in a global interest rate decline environment, with a recommendation for the hydropower leader Yangtze Power [3][29]. - The report suggests focusing on gas companies with capabilities in marine gas trading and special gas businesses, particularly Jiufeng Energy, which is anchored in commercial aerospace [3][29]. - In the environmental sector, the water and waste incineration industries are entering a mature phase, with significant improvements in free cash flow. The report recommends companies like China Everbright Environment and Shanghai Industrial Holdings, which present "utility-like investment opportunities" [3][30]. Summary by Sections Market Review - In January, the CSI 300 index rose by 1.65%, the public utility index increased by 3.19%, and the environmental index grew by 5.94%, with relative returns of 1.54% and 4.29% respectively [1][13]. - Among the sub-sectors, thermal power increased by 2.60%, while hydropower decreased by 1.65%. Renewable energy generation rose by 7.23%, water utilities increased by 3.96%, and gas utilities grew by 7.48% [1][34]. Important Events - The National Development and Reform Commission and the National Energy Administration issued a notice on January 30, 2026, to improve the capacity pricing mechanism for power generation, which will enhance the compensation for reliable capacity based on peak capacity [1][14]. Fund Holdings Analysis - In Q4 2025, the active fund allocation ratio for the public utility sector was 0.28%, a decrease of 0.04% from the previous quarter, with a negative overweight ratio of -2.15% [2][16]. - The top ten stocks by market value in the public utility sector included Yangtze Power, Huaneng International, and Longyuan Power [2][20]. - The active fund allocation ratio for the environmental sector was 0.26%, an increase of 0.02%, with the top ten stocks including Weiming Environmental and Hanlan Environment [2][21][28].