HSBC Research released a report, pointing out that due to the recent media discussion that the mainland's "dual control of energy consumption" policy may not achieve the desired effect in terms of energy consumption, the share prices of mainland public stocks have been adjusted recently, with an average pullback of about 6% since the beginning of the year.
However, the bank still believes that power shortages are structural and that demand for renewable energy and supporting infrastructure will accelerate, so it believes that companies with the theme of a transition to clean energy and other environmental, social and corporate governance (ESG) improvements are likely to be rerated.
HSBC research points out that energy transformation remains a key theme, with China Electric Power (02380.HK), Hong Kong and China Smart Energy (01083.HK) and Jingneng Clean Energy (00579.HK) preferred. They all aim to achieve green energy capacity of 35 to 90 per cent by 2025 (currently between 0 and 58 per cent). With the support of national policy, it is believed that they can be further rerated. Among them, the bank raised the target price of smart energy in Hong Kong and China from 6.7 yuan to 7.9 yuan, with a rating of "buy".