Summary of Electric Power Industry Q3 2025 Earnings Call Industry Overview - The electric power sector experienced an overall profit growth of 3.3% year-on-year, with varied performance across sub-sectors: thermal power benefited from declining coal prices, while hydroelectric power remained stable, and both renewable energy and nuclear power faced challenges due to costs and subsidy reductions [1][2][3]. Key Insights and Arguments Thermal Power - Thermal power's competitive advantage lies in cost control, with average coal prices dropping nearly 200 RMB to approximately 674 RMB, significantly enhancing profitability. Despite a nearly 6% decline in revenue, profits grew over 12% year-on-year [3][5]. - Companies like Huaneng and Huaren achieved a profit per kilowatt-hour of 1/5, indicating resilience against price pressures [3]. Hydroelectric Power - Hydroelectric power's stability is affected by regional water flow variations. The Yangtze River basin remained stable, while the Lancang River basin saw a 12% increase, and the Yarlung Tsangpo River basin experienced a 16% decline [4][7]. - The market is increasingly focusing on undervalued hydroelectric assets, with attractive interest rate spreads compared to ten-year government bonds [8]. Renewable Energy - The renewable energy sector faced profit declines due to rising depreciation costs and unfavorable market conditions, with a year-on-year profit drop of about 2%. Nuclear power profits fell by 15% due to reduced taxes and subsidies [5][9]. - The market's response has been cautious, with public fund holdings in the public utility sector reaching a historical low of 0.3%, primarily increasing positions in thermal power while significantly reducing stakes in hydro and renewable energy [5][10]. Nuclear Power - The nuclear power sector's holding proportion dropped to 2.7%, largely due to market risk aversion and negative performance from Southern Nuclear's interim results. However, long-term prospects remain strong, with the expected launch of the CNNC Zhangzhou Unit 2 in 2026 marking a new production cycle [11]. - The nuclear sector is viewed as a favorable investment option due to its anticipated growth over the next three to five years [12]. Additional Important Insights - The Hong Kong stock market pricing for thermal power is driven by long-term capital, focusing on high dividend yields, with leading companies offering yields exceeding 6% [6]. - The current investment environment is seen as a good configuration window for the electric power sector, with public fund holdings at a low of 1.6%. There is a recommendation to prioritize investments in nuclear power and consider undervalued renewable energy assets with alpha characteristics [12].