Core Viewpoint - The report from交银国际 indicates that Xinyi Energy (03868) has experienced an unexpected decline in electricity prices, increasing short-term power restriction risks. Following a recent surge in stock price, the company is now close to its target price, leading to a downgrade to a "neutral" rating due to limited valuation attractiveness amid uncertainties [1]. Financial Performance - For the first half of the year, the company reported a revenue and profit increase of 7.7% and 23.4% year-on-year, respectively [1]. - Electricity sales volume grew by 22.7%, driven by strong sunlight, with utilization hours increasing by over 3% [1]. - The restriction rate rose by approximately 10 percentage points to 14%-15% [1]. Price and Valuation Adjustments - The average tax-inclusive electricity price decreased by 12% to 0.55 yuan per kilowatt-hour, which is below the bank's expectations [1]. - The earnings forecasts for 2025-2027 have been revised down by 6%, 7%, and 9% respectively [1]. - The valuation benchmark has been raised from 9.5 times to 10 times the price-to-earnings ratio, with the target price adjusted from 1.17 HKD to 1.28 HKD [1]. Market Trends and Risks - The national photovoltaic power generation utilization rate fell by 3 percentage points year-on-year to 94% [1]. - Due to the implementation of Document No. 136 and new policies for distributed photovoltaic systems, the new installed capacity in mainland China reached 212 GW, a significant increase of 107% year-on-year [1]. - Although the rush for installations is expected to slow down, the anticipated surge in grid-connected capacity is likely to increase short-term photovoltaic power restriction risks [1].

Group 1 - The core viewpoint of the articles highlights the positive performance of the thermal power sector, with significant stock price increases for companies like Jiantou Energy and YN Holding, driven by improved profitability in the electricity and heat production industry [1] - In April and May 2025, the electricity and heat production and supply industry achieved a total profit of 114.8 billion yuan, reflecting a year-over-year increase of 6.6%, indicating ongoing recovery in the industry [1] - The electricity ETF (159611) has seen a notable increase in trading volume and scale, with a recent scale of 3.36 billion yuan, making it the largest electricity-themed ETF in the market [1][2] Group 2 - The CSI All-Share Power Index has shown a total return increase of 30.65% over the past three months, outperforming similar indices, indicating strong market performance [2] - The recent high temperatures across China have led to record electricity loads, with the highest load reaching 1.465 billion kilowatts, highlighting the urgent need for demand-side management [2] - The ongoing high temperatures are expected to significantly increase electricity demand, particularly for air conditioning, which will likely boost the generation capacity of thermal power companies [3]

Core Viewpoint - The report suggests that the decline in electricity prices is narrowing while the decline in coal prices is expanding, leading to further growth in thermal power performance compared to Q1. However, the performance of clean energy may be under pressure due to overall resource scarcity. The report maintains a "buy" rating for the sector [1]. Group 1: Electricity and Coal Prices - In Q2 2025, the average electricity price in Guangdong was 0.374 yuan/kWh, a decrease of 0.046 yuan/kWh year-on-year, while the average coal price was 633 yuan/ton, down 214 yuan/ton year-on-year [2]. - The national electricity generation in April and May was 449.1 billion kWh and 461.5 billion kWh, showing a year-on-year change of -2.3% and +1.2%, respectively, with thermal power growth turning positive in May [2]. Group 2: Hydropower Performance - In Q2 2025, the inflow and outflow of the Three Gorges Reservoir were 1.2 and 1.0 million cubic meters per second, representing a year-on-year decrease of 12.6% and 17.1%, respectively [3]. - The national electricity generation from hydropower in April and May was 78.6 billion kWh and 99.1 billion kWh, with year-on-year changes of -6.5% and -14.3% [3]. Group 3: New Energy and Wind Power - The new energy sector saw significant installations in April and May, with wind power and photovoltaic capacity additions of 32.12 million kW and 138.13 million kW, respectively, marking increases of 2.77 million kW and 10.72 million kW year-on-year [3]. - Wind power utilization hours in April and May were 374 hours, down 6 hours year-on-year, while photovoltaic utilization hours were 234 hours, down 37 hours year-on-year [3]. Group 4: Nuclear Power Developments - In April, the State Council approved 10 new nuclear power units, indicating a normalization of approvals [4]. - In Q2 2025, nuclear power generation in China was 50.4 billion kWh, an increase of 10.8% year-on-year, primarily due to a low base from the previous year [4].

Investment Rating - The report maintains an "Overweight" rating for the industry [2][8] Core Views - The overall profit of the electricity and heat production and supply industry reached 114.8 billion yuan in April-May 2025, showing a year-on-year increase of 6.6% [2] - The report anticipates that the decline in electricity prices will narrow while the decline in coal prices will expand, leading to further growth in thermal power performance compared to Q1 2025 [2] - Clean energy performance may face pressure due to overall resource scarcity, with expectations for a recovery in nuclear power generation in Q2 2025 [2] Summary by Sections Thermal Power - The average electricity price in Guangdong for Q2 2025 is 0.374 yuan/kWh, down 0.046 yuan/kWh year-on-year [2] - The average coal price at Qinhuangdao Port for Q2 2025 is 633 yuan/ton, down 214 yuan/ton year-on-year [2] - The report predicts a significant increase in net profit for companies like Jiantou Energy and Jingneng Power, with year-on-year growth rates of 188% and 52% respectively [2] Hydropower - The inflow and outflow of the Three Gorges in Q2 2025 are 1.2 and 1.0 cubic meters per second, down 12.6% and 17.1% year-on-year [2] - The report expects a slight differentiation in hydropower company performance due to reduced water flow, with projected net profit growth rates for companies like Yangtze Power and Huaneng Hydropower at 3% and -3% respectively [2] Renewable Energy - New installations for wind and solar power in April-May 2025 reached 32.12 million kW and 138.13 million kW, showing year-on-year increases of 277.2% and 107.2% [2] - The report anticipates that the performance of green energy companies will be under pressure, with expected year-on-year declines for Longyuan Power and Funiu Co. at 4% and 5% respectively [2] Nuclear Power - In April 2025, the State Council approved 10 new nuclear power units, indicating a normalization of approvals [2] - The report projects a year-on-year increase of 10.8% in nuclear power generation for China Nuclear Power in Q2 2025, with net profit growth expected at 3% [2]

Investment Rating - The report rates the industry as "Outperform" [1] Core Insights - The report highlights a potential rebound in electricity prices, which may exceed the increase in coal prices, indicating a shift in market dynamics [4] - The second half of the year is expected to end the trend of declining performance in the power sector observed in the previous two years [1][4] - Extreme weather conditions are increasing both hydro and thermal power demand, leading to rising coal stockpiles [4] Summary by Sections Electricity Market Dynamics - Recent data shows that national power load reached a historical high of 1.465 billion kW on July 4, an increase of 200 million kW from late June and 150 million kW year-on-year [4] - The East China grid load reached 422 million kW, with air conditioning demand accounting for 37% [4] - Forecasts for Shandong indicate peak loads of 122 million kW during midday and 113 million kW in the evening for the summer of 2025 [4] Coal and Energy Supply - The report notes that coal prices are expected to rebound, but the increase in electricity prices may be more significant [4] - The Ningxia-Hunan ±800 kV UHV DC project is set to enhance power supply in Hunan, with a total investment of RMB 28.1 billion and a transmission capacity of 8 million kW [4] Renewable Energy Trends - The report discusses the U.S. energy policy shift, including the planned cancellation of federal tax credits for wind and solar projects by 2027, which may impact the renewable energy sector [4] - In Guangxi, green power trading has reached 100.05 billion kWh, showing a year-on-year increase of 103.53% [4]