Summary of Conference Call Notes on China Electric Utilities Industry Overview - The conference call discusses the **China Electric Utilities** sector, focusing on the impact of recent government policies and coal prices on the industry. Key Points Coal Prices - The **PRC Sxcoal spot coal price** (5,500 kcal/kg) at Qinhuangdao was steady at **Rmb 711/tonne** on February 11, 2026, reflecting a **+1.8% week-over-week (wow)** and **+1.2% month-over-month (mom)** increase, but a **-0.2% year-over-year (yoy)** decrease [1][6] - The rise in coal prices was attributed to **Indonesia's coal export stoppage** due to government proposals to limit output [6] Government Policy - The **General Office of State Council** issued a policy paper titled **'Implementation Opinions on Improving the National Unified Power Market System (Policy No.4 in 2026)'** aimed at breaking provincial barriers and normalizing cross-region trading [2] - The policy promotes the development of market systems including long-term, spot, auxiliary services, capacity payments, and retail markets, with a target for completion by **2030** and full establishment by **2035** [2] Investment Opportunities - The new policy is expected to stimulate investments in the **PRC power industry**, benefiting power grid and plant equipment manufacturers [1] - Preference is given to **equipment suppliers** over operators, as suppliers are expected to gain from increased capital expenditures (capex), while operators may face margin cuts due to market-based tariff reductions [1] - Companies with **Buy ratings** include **Sieyuan**, **TBEA**, **Goldwind**, and **Dongfang Electric** [1][17] Energy Storage Systems (ESS) - A policy issued by the **NDRC** on January 30, 2026, states that only **grid-side independent ESS** are eligible for capacity payments, while wind and solar farms with ESS do not qualify [3] - The increased battery unit cost, driven by rising lithium prices, is expected to negatively impact **Sungrow's** gross profit margin on ESS sales, which was nearly **40% in Q3 2025** [4][5] - An **8% increase** in battery costs in January 2026 could lead to a **2% reduction** in Sungrow's net profit for every **1 percentage point** cut in gross profit margin [5] Market Dynamics - The **coal inventory** at Qinhuangdao Port decreased by **5.4% wow** to **5.30 million tonnes**, which is **16.9% below** the average of **6.38 million tonnes** in 2025 [6] Additional Insights - The call highlights the importance of monitoring coal prices and government policies as they significantly influence the profitability and operational strategies of companies within the electric utilities sector [1][2][4] - The focus on energy storage systems and their eligibility for capacity payments indicates a shift towards integrating renewable energy sources into the national grid, which may present both challenges and opportunities for existing players in the market [3][4]

Summary of Dongfang Electric (1072.HK) Conference Call Company Overview - **Company**: Dongfang Electric (DFE) - **Industry**: Gas Turbine Power Generators Key Points Potential New Orders - DFE is in negotiations with US data center customers for potential sales of gas turbine power generators, although specific timelines and details are not disclosed [1][2][3] Product Specifications - DFE can export self-developed 15MW and 50MW gas turbine power generators without restrictions from Mitsubishi, its overseas partner [2] - Data centers prefer multiple small generators (6-50MW) for stable power supply and easy replacement, as exemplified by Microsoft adding 20 units of 6MW generators in Cheyenne, WY [2] Export Limitations - DFE is currently unable to export larger gas turbine power generators (over 50MW) due to restrictions from Mitsubishi, which supplies essential raw materials for these larger units [3] Market Demand - There is strong overseas demand for gas turbines, with GE Vernova reporting accelerated orders and slot reservations for gas turbines, indicating a robust market outlook [4] - Jereh has secured contracts worth US$100 million for gas turbine power generators for AI projects in the US, highlighting the growing demand in this sector [4] Financial Metrics - Current share price is HK$21.92 with a target price of HK$22.00, indicating an expected share price return of 0.4% and a dividend yield of 2.2%, leading to a total expected return of 2.6% [5] Valuation Insights - DFE's target price is based on a price-to-book (PB) ratio of 1.41x for 2025E, which is an 80% premium to its historical average of 0.69x, justified by anticipated revenue and gross profit margin improvements in coal-fired power equipment and new orders in nuclear and hydropower [7] Risks - Key risks include: - Rising steel prices, which could compress profit margins due to fixed-price orders [8] - Decrease in average selling price (ASP), impacting revenue and margins [8] - Weak new order flows, which could hinder growth [8] Additional Insights - DFE is enhancing product reliability and managing compliance risks as part of its strategy to meet the strong demand from US data centers [1] - The company has successfully exported three units of 50MW gas-fired power equipment to Kazakhstan, showcasing its capability in international markets [2]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the diverging power solutions for AI data centers (AIDC) in the US and China, highlighting the growing demand for energy due to the rise of AI technologies [1][11][16]. Core Insights - **AIDC Power Consumption**: The International Energy Agency (IEA) forecasts that global electricity consumption of data centers will more than double from 416 TWh in 2024 to 946 TWh in 2030, with a compound annual growth rate (CAGR) of 15% [3][24]. - **Market Share**: By 2030, the US and China are expected to account for approximately 45% and 30% of the global data center market, respectively [3][25]. - **Primary Power Solutions in the US**: Due to grid connection shortfalls, onsite power generation, particularly gas turbines, is becoming the primary solution for data centers in the US. Gas turbines are favored for their shorter lead times (1-2 years) compared to grid connections (5-7 years) [4][33]. - **Backup Power Solutions in China**: China has sufficient grid power for primary needs, but there is a tight supply for backup power, especially for 2MW diesel engines, which are critical for generator sets [5][34]. Key Suppliers and Market Dynamics - A list of 16 key suppliers for AIDC power solutions is provided, which collectively account for about 10% of total AIDC capital expenditures [2][11]. - **US Market**: Gas turbine producers are experiencing strong demand, with significant order backlogs and ongoing capacity expansions [4][37]. - **China Market**: Foreign brands dominate the diesel engine market in China, but local manufacturers like Weichai and Yuchai are expected to increase their market share significantly by 2025 due to shorter lead times and quicker capacity ramp-up [5][34]. Investment Recommendations - The report covers nine stocks providing power equipment to AIDCs, with eight rated as "Buy" due to the booming AIDC capital expenditures and strong demand outlook. GEV is rated "Hold" due to higher costs associated with its offshore wind backlog [6][12]. Additional Insights - **AI Training Power Needs**: AI-focused hyperscalers can have capacities of 100MW, consuming energy equivalent to that of 100,000 households, compared to traditional data centers with capacities of 10-25MW [16]. - **Future Projections**: AIDC is projected to account for 80% of newly added data center IT power from 2024 to 2028, indicating a significant shift in energy requirements driven by AI advancements [22][23]. Conclusion - The report highlights the critical need for efficient power solutions in the rapidly growing AIDC sector, with distinct strategies emerging in the US and China. The investment landscape is favorable for companies involved in power generation technologies, particularly gas turbines and diesel engines, as demand continues to rise in response to AI developments [1][11][16].

22 October 2025 Asia-Pacific Nuclear Power Asia-Pacific Nuclear Power: What to invest in for China's next Five-Year Plan? Brian Ho, CFA +852 2123 2615 brian.ho@bernsteinsg.com Neil Beveridge, Ph.D. +852 2123 2648 neil.beveridge@bernsteinsg.com Hengliang Zhang +852 2123 2629 hengliang.zhang@bernsteinsg.com China is poised to become the world's largest nuclear power operator by 2030. China's nuclear capacity stood at 61GW in 2024 and is on track to reach 100GW by 2030, with further expansion to 150-200GW by 2 ...

Summary of Key Points from the Conference Call Industry Overview - The focus is on the **nuclear power equipment industry** in China, particularly the companies **Dongfang Electric (DFE)** and **Shanghai Electric (SHE)**, which dominate the market for nuclear equipment [1][2][4]. Core Insights and Arguments - **Profit Contribution**: DFE is expected to benefit from higher nuclear equipment prices from 2023 to 2025, alongside a surge in new orders due to China's rapid nuclear power expansion. The approval of 41 new nuclear units from 2022 to 2025 is anticipated to drive a **17.6% CAGR** in nuclear installation volume from 2025 to 2030 [1][17]. - **Market Share**: DFE and SHE each hold a **1/3 market share** in nuclear equipment biddings, with each nuclear power unit potentially generating **Rmb1.3 billion** in new orders for these companies [1][16]. - **Earnings Growth**: DFE's revenue and gross profit from power equipment sales are projected to grow at **16.3%** and **22.9% CAGRs**, respectively, from 2025 to 2027, with a potential boost from a mega hydropower project in Tibet starting in 2030, estimated at **Rmb10.6 billion** annually [3][27]. - **Valuation**: DFE's target price has been raised by **10%** to **HK$22**, reflecting a favorable valuation compared to global players, with Chinese suppliers' average **2026E P/E** and **P/B** at **26.2x** and **1.3x**, significantly lower than global averages of **65.5x** and **5-164x** [4][38]. Key Suppliers and Equipment - The main suppliers of nuclear equipment in China include **DFE**, **SHE**, and **Harbin Electric**, which together account for approximately **60%** of the nuclear island's construction costs [2][25]. - Key products include steam generators, pressure vessels, and turbine generators, with DFE noted for having the most comprehensive range of nuclear products [2][21]. Additional Important Insights - **Nuclear Equipment Pricing**: Prices for nuclear equipment have risen due to the cancellation of reference prices in recent bids, which may enhance gross profit margins for DFE and SHE [18][19]. - **Production Capacity**: DFE, SHE, and Harbin Electric each have the capacity to produce six units of **1GW** nuclear equipment per year, with shared production lines for conventional island equipment [22][21]. - **Market Dynamics**: The nuclear equipment market is characterized by limited competition due to the dominance of state-owned enterprises and a cautious approach to capacity expansion following past overcapacity issues [23][25]. - **Export Opportunities**: Chinese manufacturers are leveraging the Belt-and-Road Initiative to secure overseas orders, with notable contracts signed for projects in Pakistan and Saudi Arabia [36]. Financial Performance - DFE's revenue from nuclear equipment is expected to increase from **10%** of total revenue in 2024 to **17%** by 2030, with gross profit contributions rising from **15%** to **26%** in the same period [31][27]. - SHE's revenue from nuclear equipment showed a modest increase of **8.2%** year-over-year, but gross profit margins declined [43]. This summary encapsulates the critical insights and projections regarding the nuclear power equipment industry in China, focusing on the performance and outlook for key players like DFE and SHE.

Summary of China Energy Storage Conference Call Industry Overview - The conference call focused on the energy storage systems (ESS) market in China, highlighting significant growth and demand trends in September 2025. Key Points Market Demand and Growth - The PRC ESS market completed a total of **11.7GW/33.3GWh** of energy storage systems, representing a **57.5%** increase in capacity and a **103.7%** increase in energy storage volume year-over-year [1] - Strong demand was noted particularly from **Xinjiang** and **Inner Mongolia**, which accounted for nearly half of the month's total orders [1] - By project type, **22.3GWh** (or **67%**) of the completed projects were EPC (including equipment), while **11GWh** (or **33%**) were ESS capacity [2] Pricing Trends - The average price of **2-hour lithium-ion ESS** increased by **31% month-over-month** to **Rmb0.641/Wh**, returning to the June average [3] - The average price of **4-hour systems** rose by **9% month-over-month** to **Rmb0.464/Wh** [3] - Price fluctuations were attributed to a large number of commercial and industrial energy storage cabinets and grid-connected string systems available in the market [3][6] Project Specifics - Standalone energy storage projects accounted for over **80%** of the procurement volume, with five large projects exceeding **2GWh** completed in Inner Mongolia and Xinjiang [2] - Renewable energy storage projects made up **7.5%** of the total volume, with five projects completed in Gansu [2] Company Ratings - **Sungrow (300274 CH)** and **Deye (605117 CH)** received Buy ratings due to the positive outlook on PRC ESS demand and ASP increases [1] - **Dongfang Electric (1072 HK)** was also highlighted with a target price of **HK$20.00**, based on expected revenue and margin improvements in coal-fired power equipment [13] Risks - Key risks for **Dongfang Electric** include rising steel prices, decreasing ASP, and weak new order flows [14] - For **Deye**, risks include lower-than-expected energy storage demand and increased price competition among peers [16] - **Sungrow** faces risks from slower solar installation growth and intensified trade tensions affecting exports [18] Additional Insights - The report indicates a volatile pricing environment for ESS in 2025, with prices showing a slowly declining trend earlier in the year before rising again in September [6] - The analysis suggests that the increased demand and rising prices are favorable for PRC ESS manufacturers, indicating potential investment opportunities in this sector [1][3] This summary encapsulates the essential insights from the conference call regarding the current state and future outlook of the energy storage market in China, along with specific company evaluations and associated risks.

China’s Dongfang has received orders for the world’s largest offshore wind turbine https://t.co/DavxIBOLQu ...

Investment Rating - The industry investment rating is Attractive [5][31]. Core Insights - New wind installations in China reached 46GW from January to May 2025, representing a 134% year-over-year increase, with May alone accounting for 26.5GW [5][8]. - Wind turbine public tenders totaled 61GW in the first half of 2025, with 49GW for onshore and 12GW for offshore, marking a 17% year-over-year increase [8]. - The average onshore wind turbine (WTG) ASP (tower excluded) was Rmb1,474/kW, up 4% year-over-year but down 11% month-over-month; offshore WTG ASP (tower included) averaged Rmb2,957/kW, down 13% month-over-month [8]. - As of the end of June 2025, 19.2GW of offshore wind projects were under construction, with 2.5GW newly commissioned year-to-date [8]. Summary by Sections Wind Power Installations - New wind installations were 46GW from January to May 2025, up 134% year-over-year, with May recording 26.5GW [5][8]. Tender and Pricing Overview - Wind turbine public tenders were 61GW in 1H25, with 49GW onshore and 12GW offshore, up 17% year-over-year [8]. - Onshore WTG ASP (tower excluded) averaged Rmb1,474/kW, up 4% year-over-year, while offshore WTG (tower included) averaged Rmb2,957/kW, down 13% month-over-month [8]. Project Development - Offshore wind projects: 19.2GW under construction as of end June, and 2.5GW newly commissioned year-to-date [8].

Dongfang Electric (1072 HK/600875 CH) Conference Call Summary Company Overview - **Company**: Dongfang Electric (DFE) - **Industry**: Electrical Equipment Key Points 2024 Financial Performance Expectations - **Net Profit**: Expected to be RMB3,155 million in 2024, representing an 11% year-over-year decline and 15% below Bloomberg consensus estimates [2][24] - **Gross Margin**: Anticipated to decrease from 18.8% in 2023 to 17.6% in 2024 [2] - **Dividend Policy**: DFE plans to increase its cash dividend payout ratio by more than 1 percentage point annually from 2025 to 2027, starting from the 2024 level [2] Thermal Equipment Market Insights - **Tender Size**: Expected to stabilize at approximately 70GW in 2025, down from 80GW in 2024, with DFE maintaining a market share of around 35% [3] - **Revenue Trends**: Anticipated steady revenue in the thermal segment for 2025-2026 due to a delivery cycle of 24-36 months [3] - **Future Outlook**: A significant drop in order bidding volume is expected from 2026 onwards due to the renewal of the five-year plan [3] Margin Recovery and Renewable Division - **Gross Margin in Thermal Division**: Reported at 16% for the first nine months of 2024, down from 20% in the same period of 2023; a recovery is expected in 2025 due to a 12% year-over-year decline in steel prices [4] - **Renewable Division Gains**: DFE is expected to realize a disposal gain of RMB500 million from the sale of two wind farms, with plans to dispose of two more wind farm assets in 2025 [4] Valuation and Target Price Adjustments - **Target Price**: Raised to HKD9.50/RMB15.50 from HKD8.80/RMB14.80, implying a downside of 4% for H-shares and an upside of 3% for A-shares from the latest market close [5][31] - **Earnings Estimates**: Earnings estimates for 2024 have been cut by 26% to reflect lower gross margin assumptions, with 2025-2026 estimates also revised down by 7-14% [28][29] Financial Metrics Overview - **Revenue Projections**: - 2024: RMB65,286 million - 2025: RMB74,790 million - 2026: RMB67,153 million [29] - **Net Profit Projections**: - 2024: RMB3,155 million - 2025: RMB4,400 million - 2026: RMB4,596 million [29] Risks and Considerations - **Upside Risks**: - Faster order intake in pumped hydro and hydrogen sectors - Improved margins in renewable energy due to lower raw material costs - Enhanced operational efficiency through digital factory deployment [31] - **Downside Risks**: - Rising raw material costs - Weaker-than-expected margins in the wind segment - Lower order growth in pump storage hydro equipment [31] Market Data - **Market Capitalization**: Approximately RMB48,401 million (USD6,230 million) [7] - **Current Share Prices**: - H-shares: HKD9.94 - A-shares: RMB15.10 [7][46] Conclusion - DFE is positioned to face challenges in 2024 with expected declines in net profit and gross margins, but there are potential recovery signs in margins and strategic asset disposals in the renewable sector. The company maintains a hold rating with adjusted target prices reflecting current market conditions and future expectations.