Market Overview - The Shanghai Composite Index increased by 1.07% this week, while the Utilities Index rose by 0.28% and the Environmental Index increased by 1.06%, with relative weekly returns of -0.79% and -0.01% respectively [2][3] - Among the 31 primary industry sectors classified by Shenwan, the Utilities and Environmental sectors ranked 6th and 4th in terms of growth [2][3] Power Sector Performance - In the power sector, thermal power decreased by 0.82%, while hydropower and renewable energy generation increased by 0.82% and 1.09% respectively [2][3] - The water sector saw an increase of 2.74%, while the gas sector declined by 0.63% [2][3] Important Events - At the UN Climate Change Summit, national leaders announced China's new commitments to reduce greenhouse gas emissions by 7%-10% from peak levels by 2035 and to increase non-fossil energy consumption to over 30% of total energy consumption [3] - In August, China's total electricity consumption reached 10,154 billion kWh, a year-on-year increase of 5.0% [3] - Cumulative installed power generation capacity reached 3,690 million kW by the end of August, with solar power capacity growing by 48.5% year-on-year [3] Regional Market Insights - The Sichuan electricity spot market has begun trial settlements, experiencing instances of negative electricity prices due to an oversupply situation [4] - As of 2024, Sichuan's total installed capacity is projected to be 14,346 MW, with hydropower accounting for 71.2% [4] Investment Strategies - In the utilities sector, coal and electricity prices are expected to decline, maintaining reasonable profitability for thermal power companies [5] - Continued government support for renewable energy development is anticipated to stabilize profitability for renewable energy companies [5] - Recommendations include major thermal power companies, national renewable energy leaders, and stable nuclear power operators [5] Environmental Sector Insights - The water and waste incineration sectors are entering a mature phase, with significant improvements in free cash flow [5] - The domestic market for scientific instruments exceeds $9 billion, indicating substantial potential for domestic substitution [5] - The upcoming EU SAF blending policy is expected to increase demand for raw materials, benefiting the domestic waste oil recycling industry [5]

Core Viewpoint - The report from Huatai Securities indicates that the national thermal power generation volume has increased year-on-year in July and August, suggesting potential profit growth for major thermal power companies in the third quarter of 2025 due to peak summer demand [1] Group 1: Thermal Power - The national thermal power generation volume has shown a year-on-year increase in July and August, driven by peak summer demand [1] - The net profit per kilowatt-hour for major thermal power companies is expected to continue improving in the third quarter of 2025 [1] - The focus for thermal power in the fourth quarter of 2025 will be on the price differential between electricity and coal [1] Group 2: Hydropower - National hydropower generation volume has declined year-on-year in July and August, with variations across different river basins [1] - The profitability of hydropower will mainly depend on water inflow and reservoir conditions during the flood season [1] Group 3: Nuclear Power - Nuclear power plants are operating steadily, contributing to the overall energy mix [1] Group 4: Green Energy - The growth in installed capacity from January to August supports a year-on-year increase in electricity generation for green energy operators [1] - Attention for green energy will be on the details of pricing mechanisms and the progress of national subsidies [1] Group 5: Natural Gas - The apparent consumption of natural gas nationwide has increased year-on-year in July [1] - The focus for natural gas will be on whether demand improves [1] Group 6: Environmental Companies - Environmental companies should primarily focus on cash flow, water price adjustments, and the potential for releasing green and smart capabilities [1]

Investment Rating - The industry investment rating is "Maintain Buy" [5] Core Viewpoints - The State-owned Assets Supervision and Administration Commission (SASAC) emphasizes stabilizing electricity prices and preventing "involution" in the industry. The new target for wind and solar installed capacity is set at 360 million kilowatts by 2035 [3][10] - As of August 2025, the total installed capacity of power generation in China reached 3.69 billion kilowatts, with a year-on-year growth of 18%. Solar power capacity reached 1.12 billion kilowatts, growing by 48.5%, while wind power capacity reached 580 million kilowatts, increasing by 22.1% [4][11] - The report suggests that the current year is crucial for achieving the 14th Five-Year Plan goals, with significant growth in wind and solar installations expected, potentially reaching the 2030 target ahead of schedule [3][11] Summary by Sections Industry Overview - The Shanghai Composite Index rose by 0.21% to 3828.11 points, while the CSI 300 Index increased by 1.07% to 4550.05 points during the week of September 22-26, 2025. The CITIC Power and Utilities Index rose by 0.56%, underperforming the CSI 300 by 0.51 percentage points [1][57] Key Industry Insights - The SASAC's meeting on September 25 focused on stabilizing coal and electricity prices, indicating that the downward pressure on electricity prices is expected to ease [4][16] - The new national contribution target aims for 360 million kilowatts of installed wind and solar capacity by 2035, with nearly 200 million kilowatts of additional capacity available for development [3][11] - The report highlights the importance of renewable energy consumption and the potential for green electricity trading policies to be strengthened [3][11] Investment Recommendations - The report recommends focusing on undervalued green electricity sectors, particularly in Hong Kong stocks and wind power operators. Specific companies to watch include Xintian Green Energy (H), Longyuan Power, and Jidian Co. [4] - It also suggests paying attention to the thermal power sector, with companies like Huaneng International and Huadian International being highlighted for their potential [4][7] Market Performance - The report notes that over half of the listed companies in the power and utilities sector experienced declines in stock prices during the week [1][57] - The carbon market saw a decrease in trading prices, with a weekly drop of 0.87% [52] Key Metrics - As of August 2025, the average utilization hours for power generation equipment were 2105 hours, a decrease of 223 hours compared to the previous year [4][11] - The report indicates that the cumulative trading volume of carbon emission allowances reached 723 million tons, with a total transaction value of 49.525 billion yuan [52]

Group 1 - The report highlights that the interbank leverage ratio has slightly increased to 106.88% as of August, which is still lower than historical levels [2] - The total custody scale of bonds reached 174.54 trillion yuan, with a month-on-month increase of 1.51 trillion yuan [2] - Commercial banks are the main force in increasing holdings of government bonds, with an increase of 1.3 trillion yuan in August [2] Group 2 - The company has obtained the China Classification Society (CCS) certification for its ship coatings, which is expected to expand its market space and enhance sales [3] - The company is also pursuing certification from the American Bureau of Shipping (ABS) to further penetrate the ship coatings market [3] - The business scope is expanding with a strategic focus on industrial coatings, including new segments such as marine, offshore, and photovoltaic coatings [3] Group 3 - The report indicates that the ready-to-eat food sector is performing well, driven by the pre-made dish concept, especially in the context of the upcoming double festival [4] - The liquor industry is experiencing pressure on consumption, with high-end liquor prices slightly declining, which may stimulate sales [4] - The report suggests monitoring the recovery of banquet markets during the double festival, as it may impact overall performance in Q3 [4] Group 4 - The report discusses the rapid expansion of new energy installations under the "dual carbon" goals, with significant growth in wind and solar power [7] - Huayin Power is focusing on both thermal power investment and new energy transition, with a total installed capacity of 7.16 million kilowatts as of mid-2025 [7] - The company is actively seeking quality project indicators for thermal power, with ongoing upgrades to existing facilities [7] Group 5 - The semiconductor business of the company is experiencing growth, with a focus on high-margin products and a strategic shift away from product integration [14] - The company reported a revenue of 25.34 billion yuan in the first half of 2025, despite a decline in overall revenue due to the divestment of its product integration business [14] - The semiconductor segment is expected to benefit from strong demand in automotive and AI infrastructure markets, with projected revenues of 35.64 billion yuan in 2025 [14] Group 6 - The report indicates that Tongrentang's revenue remained stable with a slight increase, while net profit showed a decline due to external pressures [16] - The company is focusing on enhancing its product quality and expanding its international market presence, with new product registrations in Canada and Hong Kong [16] - The forecast for net profit in 2025-2027 has been adjusted downwards, reflecting the impact of rising raw material costs [16]

Core Insights - The report highlights that the total electricity consumption in society has exceeded 10 trillion kWh, showing a year-on-year growth of 5.0% [2] Industry Performance - The electricity equipment sector has shown significant performance with a 1-month increase of 17.7%, a 3-month increase of 41.0%, and a 1-year increase of 70.0% [2] - The electronics sector has also performed well, with a 1-month increase of 15.7%, a 3-month increase of 52.6%, and a 1-year increase of 118.4% [2] - The communication sector has seen a 1-month increase of 8.4%, a 3-month increase of 59.0%, and a 1-year increase of 114.4% [2] - The non-bank financial sector has underperformed, with a 1-month decrease of 9.5%, a 3-month increase of 6.3%, and a 1-year increase of 34.4% [2] - The defense and military sector has also seen a decline, with a 1-month decrease of 9.0%, a 3-month increase of 12.6%, and a 1-year increase of 49.0% [2] Electricity Generation Insights - In August, the growth rate of industrial wind power accelerated, while hydropower saw a decline, and the growth rates of thermal, nuclear, and solar power generation slowed down [2] - The report recommends focusing on the thermal power sector, highlighting companies such as Huaneng International, Guodian Power, and Baoneng New Energy as potential investment opportunities [2] - For green electricity, the report suggests prioritizing undervalued green electricity stocks and wind power operators, recommending companies like New Energy and Longyuan Power [2] - The hydropower sector is advised to focus on companies like Yangtze Power and State Power Investment Corporation [2] - The nuclear power sector includes recommendations for China National Nuclear Power and China General Nuclear Power [2]

Summary of Xi Zi Energy Conference Call Industry and Company Overview - **Company**: Xi Zi Energy - **Industry**: Solar Thermal Power Generation, Energy Storage, Nuclear Power Key Points and Arguments 1. **Cost Reduction and Policy Support**: Xi Zi Energy benefits from the decline in solar thermal power generation costs and supportive policies, with the cost per kilowatt-hour in Qinghai dropping to around 0.5 yuan, and a benchmark price of 0.55 yuan being established. By 2026, subsidies for capacity will increase to 330 yuan per kilowatt, enhancing the profitability of molten salt storage to over 7% [2][5][10] 2. **Market Potential in Solar Thermal Power**: The National Development and Reform Commission (NDRC) encourages the construction of 3GW of solar thermal power annually. Xi Zi Energy, as a major equipment supplier, focuses on heat collectors, thermal storage tanks, and heat exchangers, with an estimated market share of 20%, translating to approximately 3 billion yuan in net profit annually [2][6] 3. **Molten Salt Storage Advantages**: Molten salt storage technology shows significant advantages in deep peak shaving for thermal power, allowing load reductions to around 10%. The cost of 1GWh is approximately 340 million yuan, significantly lower than chemical storage costs, with a design life of 30 years, leading to an expected profit increase of 3-4 billion yuan from flexible thermal power renovations [2][7][8] 4. **Future of Thermal Power**: The NDRC mandates the renovation of 200-400 million kilowatts of thermal power capacity by 2027, with 600 million kilowatts already partially renovated, indicating substantial market potential for molten salt storage systems [9] 5. **International Market Demand**: Xi Zi Energy's main business includes waste heat boilers used in gas and coal power generation, with strong demand anticipated in international markets, particularly the U.S. and developing countries. Domestic thermal power construction is expected to remain stable [3] 6. **Nuclear Power Opportunities**: The company has obtained a manufacturing license for civil nuclear safety equipment, aiming for a 10% market share in nuclear power equipment, with projected orders of 2-3 billion yuan and profits of 300-400 million yuan by 2030 [4][11] 7. **Diversification in Energy Technologies**: Xi Zi Energy is diversifying into various cutting-edge energy technologies, including solid oxide fuel cells (SOFC) and pumped storage, with a projected market valuation of over 20 times, corresponding to 600 million yuan in profits by 2030 [4][12] Other Important Insights - **Industrial Heating Projects**: A specific project in Shaoxing involves an investment of 320 million yuan, generating annual profits of around 10 million yuan, potentially increasing to 60 million yuan with sufficient transformer capacity, indicating a five-year payback period [4][10] - **Technological Advancements**: The company is actively exploring advancements in energy technologies, including collaborations with research institutions for next-generation nuclear reactors, showcasing a commitment to innovation and long-term growth [11][12]

Market Overview - The Hang Seng Index and Hang Seng China Enterprises Index rose by 0.6% and 1.2% respectively last week, with the Hang Seng Index remaining flat on Friday and the China Enterprises Index increasing by 0.2%[1] - Macau's gaming revenue in August increased by 12.2% year-on-year, boosting market expectations for gaming income during September and the National Day holiday[1] - AI-related stocks, such as SenseTime (20 HK) and Hua Hong Semiconductor (1347 HK), performed well last week due to positive market sentiment[1] U.S. Market Influence - All three major U.S. stock indices rose last week, with the Dow Jones, Nasdaq, and S&P 500 increasing by 1.1% to 2.2%[1] - The Federal Reserve announced a preventive rate cut of 25 basis points and is expected to implement two more cuts this year, encouraging investors anticipating continued monetary easing[1] Sector Performance - The Hang Seng Healthcare Index fell by 1.95%, underperforming the Hang Seng Index by 2.6 percentage points, amid concerns over U.S. pharmaceutical companies investing over $350 billion domestically[3] - The automotive sector showed positive performance, with NIO (9866 HK) and XPeng (9868 HK) rising by 3.4% to 4.4%, while Li Auto (2015 HK) fell by 1.1%[4] - The Macau gaming sector has seen strong growth since the end of August, with most stocks rising by 4% to 6% last Friday, driven by record gaming revenue and increased tourist arrivals[4] Energy Sector - The renewable energy and utility sectors generally declined, with coal-fired power companies experiencing significant drops, such as Huaneng International (902 HK) down 3.5% and Datang Power (991 HK) down 7.4%[5] - Some equipment stocks, like Goldwind Technology (2208 HK) and Harbin Electric (1133 HK), saw increases of 14.4% and 15.5% respectively[5]

Report Summary 1. Investment Rating The report does not mention the industry investment rating. 2. Core View The continuous decline in the national carbon market price is due to the increase in actual circulating quotas, which has changed the trading mentality of both buyers and sellers. Whether the market can rebound in the fourth quarter depends on whether the net selling ratio of surplus enterprises' own allowances remains around 40% or significantly exceeds this level. After analyzing the operating conditions and carbon trading conditions of 31 listed companies in the A-share thermal power sector, the report moderately raises the expected selling ratio of surplus enterprises' own allowances. Although the procurement demand to be met by the voluntary selling of allowances by surplus enterprises decreases, there is still a possibility of a rebound in the fourth quarter [1][2]. 3. Summary by Section 3.1 Carbon Price Decline Caused by Increased Circulating Quotas According to the quota transfer rules, if all surplus enterprises implement the "maximum transfer" strategy, more than 200 million tons of mandatory circulating quotas will be added to the market from 2024 to 2025. The increase in actual circulating quotas has reversed the trading mentality of both buyers and sellers, leading to a continuous decline in carbon prices. As of September 18, 2025, the closing price of the national carbon market composite price was 60.33 yuan/ton, a year-on-year decrease of 34%, hitting a new low in nearly 26 months [4]. 3.2 Fourth - Quarter Market Trend Depends on Selling Ratio of Surplus Enterprises - **"Maximum Transfer" Scenario**: If all surplus enterprises implement the "maximum transfer" strategy, after subtracting mandatory circulating quotas, the procurement demand (including compliance settlement and basic transfer) to be met by the voluntary selling of allowances by surplus enterprises will be about 50 - 60 million tons in 2025. At this time, the exhaustion of mandatory circulating quotas may support a carbon price reversal, and the faster the release of mandatory circulating quotas, the earlier the market may rebound [5]. - **"Excessive Selling" Scenario**: Whether surplus enterprises adopt the "excessive selling" strategy is affected by two factors: the company's operating conditions and whether decision - makers tend to sell allowances to make up for operating losses, and decision - makers' expectations of the market price trend in 2026 and beyond [5]. 3.3 Indicator Selection for Assessing Enterprises' Quota - Selling Tendency - **Measuring Operating Conditions**: The report selects the "net profit margin attributable to the parent company after excluding non - recurring gains and losses" as the core indicator to measure the operating conditions of thermal power enterprises, with a statistical period from 2021 to 2025, calculated on a year - to - date (YTD) basis [7]. - **Observing Quota Selling**: The report sorts out the carbon emission trading income and expenditure of 31 companies based on their performance reports, with the same statistical period and calculation method [8]. - **Characterizing Compliance Pressure**: The report uses the "explicit carbon cost - to - income ratio" to characterize the company's compliance pressure [9]. - **Limitations of Indicator Design**: The "carbon emission trading" mentioned in the performance reports may involve multiple markets; most companies only disclose carbon emission trading information in semi - annual and annual reports; not all companies include carbon emission trading revenues and expenditures in non - recurring gains and losses, so data comparability is limited [10]. 3.4 Indicator Comparison Results - **Quantitative Analysis of the Impact of Carbon Market Compliance on Company Operations**: More than 90% of the sample enterprises had an explicit carbon cost - to - income ratio of less than 1% in 2024, and about 40% of the sample enterprises showed a trend of increasing compliance pressure year by year [10]. - **Operating Conditions of Power Enterprises and Timing of Selling Surplus Quotas**: It is expected that 24 sample companies had overall quota surpluses in the first two compliance cycles. Among them, the trends of the "net profit margin attributable to the parent company after excluding non - recurring gains and losses" and the "net carbon yield" (in reverse order) of 15 companies were basically synchronized, indicating that these enterprises may tend to "sell allowances to make up for operating losses". In the first half of 2025, 4 of these 15 companies had a positive balance of carbon emission rights, and some companies showed signs of weakening operations, with a high probability of adopting an "excessive selling" strategy. Some companies also showed a downward trend in their operating performance in the first half of 2025. Although they did not disclose carbon emission trading revenues and expenditures, they may have quota surpluses and tend to sell more than 40% of their surplus allowances in the second half of the year. Overall, the thermal power industry has had good operating conditions this year. Only a few enterprises are likely to "excessively sell" surplus allowances due to operating losses [2][15][17].

Core Insights - The "China Energy Outlook (2025-2060)" report indicates that the reduction and substitution of fossil energy will be crucial for China to achieve its carbon peak and carbon neutrality goals [1][2][3] Group 1: Carbon Emissions and Industry Impact - Energy activities account for nearly 90% of China's total carbon dioxide emissions and about 30% of global energy-related emissions, making it a key area for achieving "dual carbon" goals [1] - In 2024, carbon emissions from energy activities are projected to be approximately 11.2 billion tons, reflecting a 1.2% increase from the previous year, with the power generation, steel, chemical, and building materials industries contributing to about 80% of total emissions [1][2] Group 2: Future Projections and Trends - The report forecasts that coal consumption will peak between 2026 and 2028, while oil consumption will remain stable with a slight decline from its current plateau [2] - By 2030, energy-related carbon emissions are expected to reach a peak range of 11.4 to 11.6 billion tons, and by 2035, they are projected to decrease to around 10.8 billion tons, approximately 6% lower than the peak [2] Group 3: Long-term Carbon Neutrality Goals - The report suggests that through fossil energy reduction, large-scale development of carbon capture, utilization, and storage (CCUS), and forest carbon sinks, China can achieve carbon neutrality by 2060 [3] - From 2036 to 2060, carbon emissions are expected to decline rapidly, reaching approximately 9.5 billion tons in 2040, 6 billion tons in 2050, and 2.3 billion tons by 2060 [3] - By 2060, CCUS is anticipated to contribute to a reduction of about 1.3 billion tons of carbon emissions annually, alongside land-based forest carbon sinks capable of absorbing 1.5 to 2 billion tons per year, facilitating the achievement of national carbon neutrality [3]

Group 1 - The report highlights that the overall fund inflow into stock ETFs shows a reverse correlation with the market trend, indicating a lag in retail investor sentiment and behavior during market uptrends [2][24][25] - It notes that since the beginning of the year, net inflows have been particularly strong in technology growth, non-bank financials, and certain core assets [2][24] - The report suggests that while high levels of ETF fund inflows do not correlate with significant stock price increases, the pricing power of ETFs has been increasing from May to September, indicating a shift towards more informed investment behavior [2][24][26] Group 2 - The fixed income section discusses the current state of the bond market, indicating that without a strong configuration of buyers, the market remains in a state of fluctuation, particularly for long-term bonds [3][32] - It emphasizes that the lack of demand from banks and insurance companies for long-term bonds is a persistent issue, compounded by increased supply pressures [3][32][34] - The report projects that the yield on 10-year government bonds may face resistance in the range of 1.80%-1.90%, while the 30-year bonds do not show signs of reaching a peak yet [3][34] Group 3 - The report on the chemical industry indicates that the revenue and net profit of listed companies in the basic chemical sector showed slight year-on-year growth in the first half of 2025, with total revenue reaching 1.12 trillion yuan, up 3.1% [8] - It highlights that the second quarter of 2025 saw a slight increase in revenue but a decrease in profit margins, indicating a challenging environment for profitability [8] - The report notes a significant decline in the growth rate of construction projects, suggesting a potential bottoming out of profitability in the sector [8] Group 4 - The report on Tonghe Technology indicates that the company is positioned to be a leader in the charging module sector, with expectations of significant growth driven by the data center HVDC power module market [7][22] - It forecasts revenue growth from 13.3 billion yuan in 2025 to 21.9 billion yuan by 2027, with net profit expected to increase significantly during the same period [7][22] - The report assigns a price-to-earnings ratio of 43x for 2026, suggesting a target price of 43.7 yuan per share, reflecting a positive outlook for the company's future performance [7][22] Group 5 - The report on electric power companies indicates that the investment in the power grid is expected to exceed 825 billion yuan in 2025, reflecting a significant increase in infrastructure spending [20] - It highlights the establishment of settlement companies to address renewable energy subsidy gaps, indicating a proactive approach to financing renewable energy projects [20] - The report suggests that investors should focus on companies involved in renewable energy operations and those transitioning from coal to renewable sources [20]