Investment Rating - The report maintains an "Overweight" rating for the power sector [4] Core Views - The rise in coal prices is expected to support electricity price expectations, with the current price of 809 CNY/ton for Q5500 coal, marking a new high for the year [12][10] - The continuous operation of the electricity spot market across 28 provinces indicates significant progress towards a unified national electricity market [12][10] Summary by Sections Industry Insights - Coal prices have surged, creating a favorable environment for the upcoming 2026 electricity price negotiations. The coal market is currently characterized by tight supply and demand, with coal production declining for three consecutive months from July to September [12][10] - The electricity spot market has entered continuous operation, with 28 provinces now participating. This transition marks a significant shift from a planned to a market-driven electricity production organization [12][10] Market Performance - The Shanghai Composite Index closed at 3,997.56 points, up 1.08%, while the CSI 300 Index rose 0.82%. The CITIC Power and Utilities Index increased by 2.30%, outperforming the CSI 300 by 1.48 percentage points [58][59] Investment Recommendations - Focus on the thermal power sector, particularly companies like Huaneng International, Huadian International, and Zhejiang Energy, as coal prices rebound and performance expectations improve [3] - Emphasize investments in undervalued green energy sectors, particularly in Hong Kong-listed green energy and wind power operators [3] - Monitor the hydropower sector, with a recommendation to pay attention to companies like Yangtze Power and Guotou Power [3] Key Company Announcements - Huaneng announced a significant investment in a new integrated heat and power project in Heilongjiang, with a total investment of 12.043 billion CNY [69] - Shenzhen Nanshan Thermal Power received a government subsidy of 8.05 million CNY, representing 36.75% of its net profit for the last fiscal year [69]

证券研究报告 证券分析师 查浩 SAC：S1350524060004 zhahao@huayuanstock.com 刘晓宁 SAC：S1350523120003 liuxiaoning@huayuanstock.com 邓思平 SAC：S1350524070003 dengsiping@huayuanstock.com 市场表现： | 基本数据 | | 2025 | 年 | 11 | 月 04 日 | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 收盘价（元） | | | | | 3.63 | | | | | | 内 最 低 | 最 | | | | 4.14/2.58 | / | 高 | | 一 年 | | （元） | | | | | | | | | | | 总市值（百万元） | | | | | | | | 67,179.36 | | | 流通市值（百万元） | | | | | 67,179.36 | | | | | | 总股本（百万股） | | | | | 18,506.71 | | | | | | 资产负债 ...

Summary of Conference Call on Power and Coal Industry Industry Overview - The conference call focuses on the power generation and coal industry, particularly the dynamics of coal prices and electricity generation in the context of seasonal demand and supply constraints [1][2]. Key Points and Arguments Coal Price Dynamics - National power plants are accelerating their coal inventory replenishment, with October showing active coal transportation, but a slowdown is expected post-November due to weather and temperature uncertainties [1][2]. - Recent rapid increases in coal prices are driven by strong demand (due to sudden cold weather and decreased hydropower output) and supply constraints (production control measures leading to reduced output) [1][2]. - The fourth quarter is expected to see tight supply conditions, further supporting coal price increases [1][2]. Winter Coal Inventory Projections - For winter 2025, there is approximately 10 million tons of coal replenishment space compared to the peak inventory of 136 million tons at the end of 2024, influenced by temperature changes and hydropower output [3][4]. Electricity Generation Trends - The overall electricity demand remains stable, with September showing a slight improvement in generation growth compared to August. October is expected to continue this trend, but achieving positive growth for the entire year remains challenging due to significant competition from renewable energy sources [5][12]. 2026 Supply and Demand Outlook - The supply-demand balance for 2026 is uncertain and will depend on the national economic development goals and indicators such as electricity consumption's impact on GDP growth. High growth in renewable energy may exert negative pressure on coal-fired power generation [6]. Electricity Pricing Negotiations - The upcoming annual electricity price negotiations are expected to influence market sentiment in the short term, but the actual impact will depend on the negotiation outcomes and policy directions [7][8]. - Preliminary qualitative assessments suggest that electricity prices may decline in 2026, with key timelines for monitoring including the formulation of annual electricity trading plans from October to November and final negotiations in December [8]. Impact of Rising Coal Prices on Profitability - The recent surge in coal prices has significantly compressed the profitability of coal-fired power generation. For instance, the profit per kilowatt-hour for East China International has dropped to around 2.5-3 cents, down from 4-5 cents earlier in the year, due to increased fuel costs [9][10]. Short-term Loss Acceptance for Future Pricing - Coal-fired power generation may accept short-term losses in the fourth quarter to secure better pricing in 2026, although this strategy must balance various factors, including regulatory requirements and economic performance assessments [10]. Seasonal Demand Influences - Winter replenishment demand is primarily influenced by weather changes and hydropower conditions. The cold weather in northern regions has accelerated inventory replenishment, while supply constraints have made it difficult for coal prices to decline [11]. Overall Growth Outlook - The cumulative growth rate for the first nine months of the year has improved, with expectations for continued positive growth in October and the fourth quarter, although ongoing competition from rapidly growing renewable energy sources poses challenges [12].