Orient Securities·2026-03-01 10:25Investment Rating - The report maintains a "Positive" investment rating for the utility sector [4] Core Viewpoints - The utility sector is expected to experience steady growth in electricity demand, with macroeconomic trading catalyzing the revaluation of low-asset physical utilities [7] - The anticipated recovery in pessimistic earnings expectations supports the current upward trend in the sector, with the first quarter of 2026 expected to outperform market expectations [7] - The report emphasizes the need for further reforms in electricity pricing to support the increasingly complex new energy system in China [7] Summary by Sections Industry Performance - The utility sector outperformed the broader market indices, with the Shenwan Utility Index rising by 5.7%, surpassing the CSI 300 Index by 4.6 percentage points [41] - The sector's performance is driven by a combination of low physical asset valuations and macroeconomic factors [7] Electricity Prices - In Guangdong, the average spot electricity price decreased by 23.6% year-on-year, while in Shanxi, it fell by 62.3% year-on-year [10][13] - The average spot electricity price in Jiangsu also saw a decline of 6.9% week-on-week [10] Coal Prices - The price of Qinhuangdao Q5500 thermal coal increased by 4.0% week-on-week, reaching 751 RMB/ton, while the price of imported Indonesian coal rose by 5.7% [16][18] - Port coal inventories are showing signs of recovery, with Qinhuangdao port coal inventory increasing by 5.6% week-on-week [26] Investment Recommendations - The report recommends focusing on utility stocks, particularly in the thermal power sector, where companies like Jiantou Energy and Huadian International are highlighted as buy candidates [7] - For hydropower, it suggests investing in high-quality river basin hydropower stocks [7] - The nuclear power sector is noted for its strong long-term growth potential, while wind and solar sectors are expected to see significant growth under carbon neutrality expectations [7]