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Electrical utilities sector charged successfully?
Extreme weather is affecting electrical utilities supply. Since the start of summer, most southern regions have experienced continuous rainfall, with some areas facing flood situations. Meanwhile, northern regions have been experiencing sustained high temperatures leading to severe drought in some areas. This polarization of south flooding and north drought has resulted in a rapid growth of electricity demand in the north, potentially extending the bullish trend in the electrical utilities sector.
Stocks in the electric power sector rose across the board in the Hong Kong stock market, with an expected increase in electricity consumption during the summer. Under the new electricity market, the valuation of thermal power is expected to be reshaped.
According to the Zhitong Finance APP, electric power stocks are generally rising, as of press time, CGN Power (01816) rose 3.68% to HKD 3.88; China Power (02380) rose 3.23% to HKD 3.84; China Resources Power (00836) rose 2.16% to HKD 23.65; Huadian Power International Corporation (01071) rose 1.18% to HKD 5.15. In terms of news, the National Energy Administration recently issued a notice on guaranteeing the consumption of new energy and promoting high-quality development of new energy. The notice clarifies the full play of the electricity market mechanism in promoting the construction of a new power system.
Electrical utilities stocks are collectively rising, CGN Power (01816) has risen by 3.99%. Institutions point out that the decline in electricity production costs is advantageous for the profit performance of mainland electrical utilities companies.
Jingu News | Electrical utilities stocks rose collectively, CGN Power (01816) up 3.99%, China Longyuan (00916) up 3.98%, China Resources Power (00836) up 3.67%, China Power (02380) up 2.96%, Datang International Power Generation (00991) up 2.92%, Xinyi Energy (03868) up 2.65%. In terms of news, ICBC Asia pointed out that as the electricity demand in the mainland continues to increase at different levels, coupled with the increase in the use of electricity due to the development of new technologies, it will benefit the income of electricity companies. At the same time, with the decline in the production cost of electricity, it is expected to be beneficial.
Bocom Intl: Maintains a "buy" rating for China Power (02380), with a target price raised to HKD 4.75.
Zhītōng Cáijīng APP learned that Bocom Intl released a research report stating that it maintains a 'buy' rating for China Power (02380), taking into account adjustments made to wind/solar/hydro power sector utilization hours and installation forecasts. The company's earnings forecast for 2024-2026 has been raised by 2.2%/2.5%/0.3%, and the target price has been raised to HKD4.75 (previously HKD3.9) with an expected dividend ratio of 50%. A dividend yield of 7.7% in 2025 is still attractive. The bank believes that the country's accelerated adjustments and strengthened supporting plans for the use of new energy will ensure reasonable utilization rates even after new installations are put into operation.
Electric power stocks have risen across the board, with Huaian International Power (01071) rising 3.64%. Institutions point out that the electricity spot market will be a key solution for the characteristics of new energy generation.
Jingu Finance News | Electric power stocks have risen across the board. As of press time, Huadian International Electric (01071) was up 3.64%, Huaneng International Electric (00902) was up 3.38%, Datang International Power Generation (00991) was up 2.98%, China Power (02380) was up 2.34%, and China Resources Power (00836) was up 2.33%. Citic Securities stated that on June 4, 2024, the National Energy Administration issued the "Notice on Doing a Good Job in the Consumption of New Energy and Ensuring the High-Quality Development of New Energy", which addresses the coordination of Web-based development, enhancement of regulation capacity, allocation of power grid resources, and optimization of new energy utilization targets.
[Brokerage Focus] Bocom Intl raises the target price of China Power (02380) by 21.8%, citing that the new policy of improving consumption and absorption is still favorable for new wind power development.
Bocom Intl released research reports indicating that China Power (02380) has made great progress in hydropower recovery in April, with a significant year-on-year increase of 81% in power generation from January to April. Therefore, the bank raised the full-year hydroelectric utilization hours in 2024 from 2,750 to 2,900 hours. The bank pointed out that due to the year-on-year decline in project utilization and wind speed from the beginning of the year to now, the bank revised down the forecast of wind/solar utilization hours of the company for 2024 by 1% to the same level as last year. The bank also adjusted the proportion of the company's annual wind/solar new installed capacity, from the original 4.5/2.5 GW to 3.0/4.0 GW, and maintained a new installed capacity of 7.0 GW for the whole year.
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