Investment Rating - The report maintains a positive outlook on the power sector, particularly hydropower and thermal power, indicating a "Buy" rating for several companies within these segments [3][56]. Core Insights - Hydropower companies have shown resilience with increased generation capacity, while thermal power has benefited from significantly reduced coal prices, leading to improved profitability in Q2 [3][15]. - The report highlights the impact of extreme weather on hydropower generation, with varying performance across regions, and notes the potential for continued profitability in thermal power due to low fuel costs [5][19]. Summary by Sections 1. Power Sector: Hydropower and Thermal Power Performance - Hydropower generation in the first half of 2025 showed a mixed performance across regions, with national utilization hours at 1023 hours, down 70 hours year-on-year. Notably, Sichuan and Yunnan provinces reported increases in utilization hours [9][14]. - Major hydropower companies like Yangtze Power and Huaneng reported significant increases in generation, with Yangtze Power's output at 1266.56 billion kWh, up 5.01% year-on-year [13][14]. - Thermal power costs have decreased significantly, with coal prices dropping to 632 RMB/ton in Q2 2025, a 26% year-on-year decline. This has led to substantial profit increases for companies like Jingneng Power and Jiantou Energy, with net profits expected to rise by over 100% [15][16]. 2. Natural Gas Market Dynamics - Rising summer temperatures have increased demand for gas-fired power, with European gas prices experiencing fluctuations. As of July 11, 2025, the Henry Hub spot price was $3.31/mmBtu, while European prices saw increases of 6.77% [19][20]. - The report notes that despite high temperatures driving demand, overall supply remains balanced, with U.S. natural gas production at record levels and inventories increasing [22][27]. - Recommendations include focusing on integrated gas companies and city gas firms, with specific mentions of Kunlun Energy and New Hope Energy as potential investment opportunities [43][56]. 3. Weekly Market Review - The report indicates that the public utility sector, including power and gas segments, outperformed the Shanghai Composite Index during the week of July 8-12, 2025 [45][46]. 4. Company and Industry Developments - Recent regulatory updates include initiatives to enhance the planning and construction of high-power charging facilities and the competitive allocation of offshore photovoltaic projects in Shanghai [51]. - Key announcements from companies such as China General Nuclear Power and Guangxi Power highlight ongoing operational improvements and generation capacity increases [52][54].