2025-07-22 01:59Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the Clean Energy sector in China, specifically highlighting the Yarlung Zangbo hydropower project which commenced construction on July 19, 2025, in Nyingchi, Tibet [1] Company and Project Details - The Yarlung Zangbo River Lower Reaches Hydropower project is operated by the newly-established China Yajiang Group Corporation and consists of five cascade power stations with a planned investment of approximately Rmb1.2 trillion [1] - For comparison, the Three Gorges and Baihetan projects had investments of Rmb250 billion and Rmb220 billion, respectively [1] Investment Implications - Key beneficiaries identified within the coverage include UHV transmission equipment players such as: - Pinggao (600312.SS) - XJ Electric (000400.SZ) - NARI Tech (600406.SS) - Sieyuan (002028.SZ) [2] - Opportunities are also seen for: - Hydropower plant engineering companies - Key hydropower equipment manufacturers like Dongfang Electric (600875.CH/1072.HK) and Harbin Electric (1133.HK) [2] - Potential for the development of "hydro-solar-wind bases" to leverage solar and wind power during the dry season for stable renewable energy output [2] Capacity and Output Estimates - The Medog hydropower station is designed with an installed capacity of approximately 60 GW, significantly higher than the Three Gorges' 22.5 GW and Baihetan's 16 GW [5] - Estimated annual electricity output for the Medog station is around 300 billion kWh, compared to 80-90 billion kWh for the Three Gorges and ~60 billion kWh for Baihetan [5] - The electricity generated will be transmitted to other regions in China via UHV lines, while also catering to local demand in Tibet [5] Valuation Methodology - XJ Electric (000400.SZ) uses a discounted cash flow model with a WACC of 8.0%, reflecting a cost of equity of 9.5% and an after-tax cost of debt of 4.5% [8] - Sieyuan Electric Co. Ltd. (002028.SZ) employs a similar discounted cash flow analysis with a WACC of 7.5% [9] - Henan Pinggao Electric (600312.SS) also uses discounted cash flow methodology with a WACC of 8.2% [10] - NARI Technology (600406.SS) follows a discounted cash flow approach with a WACC of 8.0% [16] Risks and Opportunities - Upside Risks include: - Better-than-expected progress in orders - Market share gains - Higher-than-expected investment in the grid distribution network [12][13][14] - Downside Risks include: - Delays in the working progress of orders - Lower-than-expected investment in the grid distribution network - Increased competition affecting margins [12][18][19] Analyst Ratings - The report includes various companies in the China Utilities sector with ratings such as Overweight and Equal-weight for companies like CGN Power Co., Ltd. and China Gas Holdings [78][80] Conclusion - The Clean Energy sector in China, particularly hydropower, presents significant investment opportunities driven by large-scale projects like the Yarlung Zangbo and Medog stations, with various companies positioned to benefit from this growth.