GF Securities: The mid-term reporting period for utilities is approaching, focus on high-performing individual stocks and performance inflection points
The Zhitong Finance App learned that GF Securities released a research report saying that in the electricity interim report and performance forecast, hydropower companies performed well; thermal power companies' second-quarter performance was under pressure, mainly due to falling electricity prices and rising coal prices; Green Power's performance generally declined; and the gas industry's performance was steady. Electricity supply and demand are facing an inflection point. Electricity prices have bottomed out and rebounded due to high coal prices and improved supply and demand, and profits in the power industry are also expected to reach an inflection point. The trend in electricity prices has reversed, and while profits are stable and high dividends, the electricity sector is also benefiting from the performance flexibility brought about by the recovery in electricity prices, and the sector has both offense and defense.
The main views of GF Securities are as follows:
Interim results were released one after another, with outstanding hydropower performance and fiery green performance under pressure
Looking through the electricity report and performance forecast, the hydropower company's performance was outstanding. In the case of a 32% year-on-year decline in hydropower in the Yalong River, Sichuan Investment Energy's performance fell only 10.7%, exceeding expectations or due to higher electricity prices and lower costs; in 26Q2, the south generally had abundant incoming water, and Guiguan Electric Power, Qianyuan Electric Power, South Grid Energy Storage, and Three Gorges Water Resources all achieved significant increases in performance. Thermal power companies' second-quarter results were under pressure, mainly due to falling electricity prices and rising coal prices. Zhejiang Electric Power's 26Q2 net profit was -84% to -73% year-on-year. Guangdong Electric Power and Huayin Electric Power changed from profit to loss, focusing on the inflection point in performance after electricity prices bottomed out. The performance of green power companies generally declined. The net profit of Three Gorges Energy, Jinkai Xinneng, Jiangsu Xinneng, and Green Power all fell by more than 50% in the first half of 2026. Jingke Technology changed profits from profit to loss. The green power industry was affected by factors such as falling electricity prices and an increase in the abandonment rate of wind and light. The gas industry showed steady performance. Jiufeng Energy's 26Q2 performance exceeded expectations by 45.4% year on year, and the net profit of Foran Energy increased 8% year on year.
After the interim reporting period, focus on evaluating the inflection point in performance brought about by the recovery in electricity prices
Recently, demand for electricity has risen, daily coal consumption has increased, and inventories have declined, driving coal prices to continue to rise. Electricity load continues to reach new highs, and the growth rate of installed electricity has slowed in the 15th Five-Year Plan. Electricity supply and demand are facing an inflection point. Electricity prices have bottomed out and rebounded due to high coal prices and improved supply and demand, and profits in the power industry are also expected to reach an inflection point. By sector, after the second quarter, due to falling electricity prices and the expected performance decline due to rising coal prices, more attention was paid to the performance improvements brought about by the expected recovery in electricity prices next year; hydropower benefited from strong incoming water performance this year, and southwest watersheds such as the Yalong River also resumed year-on-year growth in the second half of the year. El Niño continued, which favors incoming water from the south, compounded the recovery in electricity price expectations. Hydropower ushered in a cycle of rapid rise in volume and price; in the past two years, due to falling electricity prices, the risk of electricity prices subsided, we are looking forward to the future production of nuclear power. Strong certainty and good growth; the performance of the green electricity sector continues to decline, but electricity A rebound in prices will bring marginal improvements. After the disbursement of subsidies is accelerated, cash flow will be improved, and attention will be paid to the reversal of Green Power's performance. In a state where gross margins continue to be repaired, the gas sector is paying more attention to the increase in gas sales. The procyclical nature is stronger, the dividend rate is high, and the dividend value is outstanding.
Fund holdings declined month-on-month, and the sector underestimated, underestimated, underrated, underrated, had excellent performance, and outstanding dividend allocation values
(1) The profit stability of the utilities sector has continued to increase. Since 2023, it has maintained a profit volume of about 50 billion yuan for 9 quarters other than Q4; (2) Net operating cash flow of 775.3 billion yuan in 2025, +15.0% year over year, net investment cash flow of 737.1 billion yuan, -8.0% year over year, positive free cash flow, positive free cash flow, capital expenditure contracted, and cash flow continued to improve; (3) The sector's dividend rate increased to 51% at the end of the second quarter; (4) Fund positions were low, and the sector's dividend rate increased to 51% at the end of the second quarter; (4) Fund positions were low, and the sector's dividend rate increased to 51% at the end of the second quarter; (4) Fund positions were low, and the sector's dividend rate increased to 51% at the end of the second quarter; (4) Fund positions were low, and the sector's dividend rate increased to 51% at the end of the second quarter; (4) Fund positions were low, and the sector's dividend rate increased to 51% at the end of the second quarter; (Public offering accounts for 0.21% of positions, far less than The sector accounts for 2.43% of the market capitalization. The trend in electricity prices has reversed, and while profits are stable and high dividends, the electricity sector is also benefiting from the performance flexibility brought about by the recovery in electricity prices, and the sector has both offense and defense.
It is recommended to focus on electricity price expectations to improve the profitability of water, fire, and nuclear profits
1. Thermal power: Thermal power with high dividends and integrated coal power: Huaneng International Electric Power Co., Ltd., Guodian Electric Power, Shenneng Co., Ltd., Huaneng Mengdian; 2. Hydropower: Sichuan Investment Energy and Yangtze River Electric Power, which have rebounded electricity prices and abundant incoming water; 3. Nuclear power: Chinese nuclear power with reversal of electricity price expectations. 4. Gas: Jiufeng Energy and Fuyuan Energy with diversified gas sources.
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