Core Viewpoint - Zhongyuan Securities maintains an "outperform" investment rating for the power and utilities sector based on industry development prospects, performance growth expectations, and valuation levels [1] Industry Overview - The power and utilities sector is characterized by strong defensiveness and stable performance growth, with projected revenue and net profit growth in 2024 [1] - As of June 15, 2025, the power and utilities index increased by 2.25%, outperforming the CSI 300 index by 4.05 percentage points [1] Subsector Analysis - Hydropower shows the most stable performance and highest dividend ratio, while nuclear power is affected by declining market electricity prices [2] - In 2024, power generation companies contributed over 82% of the net profit in the power and utilities sector [2] - Hydropower revenue and net profit are expected to grow due to favorable water conditions and reduced financial costs [2] Investment Themes - Hydropower is highlighted as a representative of dividend assets with a deep natural monopoly and significant profit potential due to low generation costs [3] - Long-term investment focus is recommended on major hydropower operators such as Yangtze Power, Huaneng Hydropower, and Chuanwei Energy [3] - Coal-fired power is gradually enhancing its utility attributes, with a recommendation to consider the joint development of hydropower and coal-fired power by Guotou Power [3] - Nuclear power operators are expected to maintain strong profitability, although market price declines may impact their performance in 2025 [3] - New energy generation faces challenges from declining average electricity prices despite rapid capacity growth [3]

Company Overview - Jiuzhou Group was founded in 1993, focusing on smart distribution networks and energy sectors, and is a leading provider of new power and energy infrastructure [1] - The company is a national key high-tech enterprise and was successfully listed on the Chinese Growth Enterprise Market in 2010 (stock code: 300040) [1] - Jiuzhou Group has established three core business segments: smart distribution networks, new energy, and comprehensive energy services [2] Business Operations - The group manages over 40 subsidiaries across multiple provinces and regions in China, with a marketing service network covering 30 provinces and autonomous regions [2] - The company has been recognized as a key software enterprise and has received numerous honors, including being listed among the top 100 private technology companies in China [2] - Since 2015, Jiuzhou Group has transitioned from a pure equipment supplier to a modern intelligent manufacturing model, integrating products, engineering design, construction, financial services, and operation maintenance [2] Technological Advancements - The company has over 200 patents and has established a strong presence in more than 70 countries and regions [3] - As of December 2024, Jiuzhou Group has constructed, controlled, and held new energy power station capacity exceeding 2.7 GW, with an additional 1 GW in projects under construction [3] Financial Aspects - The company has over 1 billion CNY in overdue national subsidies, primarily for electricity subsidies, with delays typically ranging from 2 to 3 years [4][5] - The smart distribution network business has an order volume exceeding 800 million CNY in 2024, representing a year-on-year growth of over 30% [8] - The company aims for a revenue growth target of 30% in the smart distribution network segment and 10% in both new energy and comprehensive energy segments for 2025 [12] Market Outlook - The company anticipates significant growth in its export business over the next five years, driven by the demand for equipment upgrades in both domestic and international markets [6] - The management is optimistic about future growth due to the recovery of investment in the power grid and the transition of clean energy projects from development to construction phases [8] - The potential market for decentralized wind power and clean energy heating is substantial, with nearly 300 county-level administrative units and over 3,000 townships in Northeast China [11]

Core Viewpoint - Longyuan Power's Q1 2025 net profit decreased by 21.9% year-on-year, primarily due to the profit gap from the divestment of thermal power assets and uncontrolled operating costs [1][2] Group 1: Financial Performance - Longyuan Power's Q1 net profit decline was approximately 100 million yuan due to the divestment of thermal power business, which aligns with the company's strategy to focus on clean energy [2] - Operating expenses grew at a rate significantly higher than revenue, contributing to the profit decline [2] - The company added 34.7 MW of wind power and 1.5 MW of solar power in Q1, totaling 36.25 MW, but this increase did not effectively offset the cost pressures [2] Group 2: Market Outlook and Strategy - Jiao Yin International predicts that Longyuan Power will accelerate its installation pace before the June 1 policy deadline, aiming to add 5 GW of clean energy projects in 2025, primarily in wind power [3] - The rapid deployment of new energy projects may lead to increased equipment procurement costs and potential issues with grid absorption capacity, raising concerns about the company's ability to balance expansion with profitability [3] - The low proportion of solar installations (less than 5%) highlights the company's reliance on a single business structure, which may limit its long-term risk resilience [3] Group 3: Valuation and Market Sentiment - Jiao Yin International has lowered Longyuan Power's 2025-2026 profit forecasts by 2.4% and adjusted the target price to 7.81 HKD while maintaining a "buy" rating, reflecting a balance between short-term volatility and long-term value [4] - The current stock price corresponds to a price-to-earnings ratio of 3.17, indicating it is at a historical low, leading some investors to believe that negative factors are over-reflected [4] - Concerns remain regarding the company's profit structure post-thermal power divestment, particularly as the wind power sector faces challenges from market price reforms [4]

Group 1 - The company achieved a total operating revenue of 23.517 billion yuan in 2024, representing a year-on-year increase of 20.09% [1] - The net profit attributable to shareholders reached 531 million yuan, up 181.59% year-on-year, while the non-recurring net profit surged by 5401.22% to 399 million yuan [1] - The significant performance improvement was primarily driven by the decline in coal prices, expansion of installed capacity, and advancement of renewable energy projects [1][4] Group 2 - The average procurement price of thermal coal was 822.02 yuan per ton, a decrease of 10.07% year-on-year, which contributed to the increase in gross profit margin [4] - The company completed a total electricity generation of 50.366 billion kilowatt-hours, marking a 27.79% increase year-on-year, largely due to the acquisition of additional power generation assets [4] - Despite the positive impact of lower coal prices, the average on-grid electricity price fell by 2.82% to 437.37 yuan per megawatt-hour, indicating potential pressure on profitability from market reforms [4][6] Group 3 - The company has made progress in its renewable energy transition, with 457,100 kilowatts of renewable capacity installed and 600,000 kilowatts under construction [5] - The proportion of renewable energy capacity to total installed capacity remains low at 3.74%, indicating a continued reliance on traditional thermal power [5] - The company is actively developing energy storage projects, including pilot projects and distributed energy storage initiatives [5] Group 4 - The net cash flow from operating activities was 3.771 billion yuan, reflecting a year-on-year increase of 75.25%, indicating strong cash flow health [6] - The company faces challenges from electricity price fluctuations due to ongoing market reforms, which may impact future performance [6] - The need to balance traditional thermal power advantages while accelerating the renewable energy transition is crucial for long-term competitiveness [6]