Core Viewpoint - Liaoning's electricity market has effectively utilized a real-time pricing mechanism to optimize power generation and consumption, ensuring stable electricity supply during winter challenges while promoting renewable energy integration [1][2] Group 1: Electricity Supply and Demand Management - The electricity spot market in Liaoning operates like a "power stock exchange," generating price signals based on real-time supply and demand, which guides efficient resource allocation [1] - During periods of high wind energy generation, market prices decrease, encouraging thermal power plants to reduce output and accommodate clean energy [1] - In November, Liaoning's market mechanism facilitated the release of 19 billion kilowatt-hours of consumption space for wind and solar energy, with total renewable generation reaching 59 billion kilowatt-hours, a 44% year-on-year increase [1] Group 2: Market Performance and Economic Impact - Liaoning's electricity market is not limited to provincial boundaries; it actively engages in inter-provincial trading, exporting over 300 million kilowatt-hours in November, generating nearly 100 million yuan in market revenue [2] - The electricity spot prices in November reflected a "supply exceeds demand" situation, with average prices significantly lower than during the trial period, benefiting multiple stakeholders [2] - The average settlement price for power generation decreased by approximately 6%, while user-side prices fell by about 10%, with over 80% of electricity sales companies achieving stable profits [2] Group 3: Contribution to National Energy Strategy - Liaoning's stable electricity market practices provide a new market-oriented and intelligent defense for winter heating and supply, contributing valuable insights to the national unified electricity market construction [2]

Summary of CGN Power Co., Ltd 1Q25 Conference Call Company Overview - **Company**: CGN Power Co., Ltd - **Industry**: Utilities - **Region**: Asia Pacific, specifically China Key Points Market Tariff and Performance - The overall market tariff for CGN was Rmb0.36/kWh, a decrease of 3.46 cents year-over-year [3] - In 1Q25, Guangdong accounted for 36.5% of market volume, an increase of 8.7 percentage points [3] - The decline in power tariff was attributed to spot market trading, with management indicating that the impact from the spot market will be limited in the upcoming quarters [3] Spot Market Trading - In 1Q24, CGN procured approximately 400 million kWh from the spot market, achieving a margin of over 10 cents/kWh [3] - In contrast, in 1Q25, CGN sold around 30 million kWh to the spot market at approximately Rmb0.29/kWh, negatively affecting the overall market tariff [3] Ancillary Service Fee Savings - The trial run of the power spot market in Liaoning province resulted in savings of approximately Rmb500 million in ancillary service fees for CGN's Hongyanhe plant [4] - Continuous operations of the spot market in Liaoning are expected to commence by the end of the year [4] Project Pipeline - CGN has a robust pipeline with at least 10 new units planned for construction at existing nuclear bases, which are anticipated to receive approval in the coming years [4] Financial Performance - The Guangdong market tariff decreased by 8.2 cents year-over-year to Rmb0.33/kWh, which was more significant than the decline in annual contracts due to spot trading [9] - Guangxi's market tariff fell by 6.9 cents year-over-year, while tariffs in Liaoning and Fujian remained mostly flat [9] - The company completed five outages in 1Q25, with plans for six outages each in Q2 and Q3, and two in Q4 [9] - Full-year R&D costs are expected to be comparable to 2024, with a higher tax burden in 1Q attributed to a one-off adjustment [9] Valuation and Risks - A P/E multiple of 13x is applied to the 2025E EPS, reflecting an expectation of accelerating trends in new projects compared to previous years [14][15] - Risks to the upside include higher-than-expected utilization, upward adjustments of on-grid tariffs, and timely approvals of new projects [17] - Risks to the downside include lower-than-expected utilization, downward adjustments of on-grid tariffs, and delays in new project commissioning [17] Stock Rating - The stock is rated as "Overweight" with a price target of HK$2.81, indicating a potential upside of 15% from the current price of HK$2.45 [5] Additional Insights - The company is positioned to benefit from the ongoing transition to a more competitive power market in China, with significant cost savings and project expansions on the horizon [4][9] - The management's cautious outlook on the spot market's impact suggests a strategic focus on stabilizing revenue streams amidst fluctuating tariffs [3][4]