--- title: "China Galaxy Securities: Thermal and Hydropower Performance Growth, New Energy Enters a New Stage of High-Quality Development" type: "News" locale: "en" url: "https://longbridge.com/en/news/239936614.md" description: "China Galaxy Securities released a research report indicating that the decline in coal prices is expected to improve the fundamental outlook for the thermal power industry, recommending attention to companies with significant coal price exposure. The hydropower sector performs well in a low-interest-rate environment, while nuclear power is affected by the decline in thermal power electricity prices, but has outstanding long-term growth potential. The new energy industry will enter a stage of high-quality development, with a focus on high-quality companies primarily in wind power, especially in the supply and demand landscape of new energy in Fujian Province. Both thermal power and hydropower have achieved positive growth, and it is expected that performance will continue to improve in the future" datetime: "2025-05-13T01:25:02.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/239936614.md) - [en](https://longbridge.com/en/news/239936614.md) - [zh-HK](https://longbridge.com/zh-HK/news/239936614.md) --- # China Galaxy Securities: Thermal and Hydropower Performance Growth, New Energy Enters a New Stage of High-Quality Development According to the Zhitong Finance APP, China Galaxy Securities has released a research report stating that the recent continuous decline in coal prices is expected to reverse the market's pessimistic fundamental expectations for thermal power in 2025. It is recommended to pay attention to companies with significant market coal exposure and those in regions where the annual long-term contract electricity price reduction is relatively small. In a low-interest-rate environment, the bank is optimistic about the hydropower sector, which has strong dividend attributes. Nuclear power is temporarily affected by the decline in thermal power prices, but the overall extent is controllable, and under the normalization of domestic nuclear power unit approvals, its long-term growth attributes are prominent. In terms of new energy, with the issuance of Document No. 136, the industry is expected to transition from a previous phase of rapid scale expansion to a high-quality development phase that balances efficiency and scale. During this process, the bank is optimistic about leading companies with high-quality existing projects, a wind power-dominated installed capacity structure, and strong cost control capabilities; additionally, from a regional layout perspective, the bank is optimistic about Fujian Province, which has a favorable new energy supply and demand pattern. ## The main views of China Galaxy Securities are as follows: **Thermal Power: Coal price decline offsets the impact of volume and price drop, performance still achieves positive growth** In 2024 and Q1 2025, the SW thermal power sector achieved a net profit attributable to shareholders of 62.57 billion and 20.63 billion yuan, a year-on-year increase of 37.3% and 9.0%. Although the thermal power sector is affected by the dual adverse factors of declining electricity volume and price, it still achieved positive performance growth due to the significant drop in coal prices. In 2024 and the first quarter of 2025, thermal power generation is under increasing pressure, with the year-on-year growth rate of national large-scale thermal power generation being +1.5% and -4.7%, respectively; due to weak electricity demand and the impact of falling coal prices, long-term contract electricity prices in most provinces have also been adjusted. On the cost side, since 2024, coal prices have entered a downward channel, and on May 8, 2025, the market price of 5500 kcal thermal coal at Jing Tang Port has dropped to 640 yuan/ton, a decrease of 286 yuan/ton or 31% compared to the beginning of 2024, and the downward trend has not stopped. The bank believes that there is still room for improvement in thermal power profitability. **Hydropower: High performance growth, limited electricity price reduction, focus on water inflow and new unit commissioning** In 2024 and Q1 2025, the SW hydropower sector achieved a net profit attributable to shareholders of 56.321 billion and 11.338 billion yuan, a year-on-year increase of 17.6% and 28.1%. The performance growth in 2024 is mainly due to abundant water inflow and reduced financial costs. The good performance in Q1 2025 is mainly due to abundant water inflow, good energy storage conditions at the beginning of the year, contributions from new unit commissioning by some companies, and continuous optimization of financial costs. From the Q1 2025 data, the electricity price for external hydropower represented by Changjiang Electric Power has only decreased by 0.62% year-on-year, showing strong resilience, which may indicate that the electricity price for external large hydropower is less affected by the local thermal power price decline than the market expected. It is recommended to pay attention to the catalytic effects of water inflow and new unit commissioning on performance. Regarding water inflow, as of May 1, 2025, most large reservoirs have better water storage and outflow conditions than the same period last year; regarding new unit commissioning: from 2025 to 2026, the installed capacity elasticity of Huaneng Hydropower, Guoneng Dadu River, and SCTE is 9.8%, 30%, and 32%, respectively. **Nuclear Power: Short-term performance affected by income tax arrears, long-term growth potential is prominent** In 2024 and Q1 2025, the SW nuclear power sector achieved a net profit attributable to shareholders of 19.591 billion and 6.163 billion yuan, a year-on-year decrease of 8.2% and 7.5%. The decline in net profit in 2024 was largely affected by the tax expenses related to the VAT refunds from previous years. In Q1 2025, excluding the impacts of China National Nuclear Power's new energy business, as well as China General Nuclear Power's R&D expenses and credit impairment losses being reversed, the performance of the nuclear power sector remained relatively stable. Looking ahead to 2025, both companies face downward pressure on grid electricity prices, with China National Nuclear Power's price drop in Q1 2025 being approximately 1 cent/kWh and China General Nuclear Power's about 2 cents/kWh. However, considering that both companies will have new units put into operation during the year, this is expected to offset the adverse impact on electricity prices. In the long term, under the normalization of domestic nuclear power unit approvals, China National Nuclear Power and China General Nuclear Power, as a dual oligopoly, have significant installation flexibility and outstanding growth attributes. **New Energy: Short-term performance under pressure, Document No. 136 helps the industry enter a new stage of high-quality development** In 2024 and Q1 2025, the selected sample companies in new energy power generation achieved a net profit attributable to shareholders of 17.8 billion and 5.62 billion yuan, a year-on-year decrease of 7.8% and 7.8%. The decline in performance was mainly due to unfavorable wind and solar resource conditions, declining grid electricity prices, and impairment provisions. Looking ahead, the issuance of Document No. 136 promotes the accelerated market entry of new energy, and the bank expects industry investment to gradually become more restrained. On May 8, 2025, Shandong released a draft for public consultation on the implementation plan of Document No. 136. Based on its design of the mechanism for existing and incremental project electricity and mechanism electricity prices, the bank judges: 1. The revenue expectations for existing projects are clearer, with mechanism electricity prices anchored to the benchmark price of coal-fired power generation. In terms of the design of the mechanism electricity ratio, provinces with relatively low marketization of new energy are expected to have more advantages, such as Guangdong, Zhejiang, Shandong, and Jiangxi. 2) For incremental projects that need to participate in bidding, provinces with strong demand for green electricity (driven by both electricity demand and dual control policies on energy consumption or renewable energy consumption responsibility weights) and relatively low local new energy proportions are expected to have lower bidding intensity, such as Fujian and Guangdong. 3) Based on the design of the bidding lower limit, leading companies with strong cost control capabilities are expected to have greater competitive advantages. 4) Compared to photovoltaics, the bank is more optimistic about the ability of wind power, which has a relatively smooth output curve, to profit in the electricity market, and future installation growth space is expected to open up. **Risk Warning** Risks of water, wind, and sunlight resources not meeting expectations; risks of significant increases in coal prices; risks of reductions in grid electricity prices ### Related Stocks - [600900.CN](https://longbridge.com/en/quote/600900.CN.md) - [600674.CN](https://longbridge.com/en/quote/600674.CN.md) - [600025.CN](https://longbridge.com/en/quote/600025.CN.md) - [601985.CN](https://longbridge.com/en/quote/601985.CN.md) ## Related News & Research - [08:27 ETCRB Workforce ranks #7 on SIA list of fastest growing IT staffing firms in the United States](https://longbridge.com/en/news/295536979.md) - [Russia says Ukrainian attacks are pushing up global food prices, causing grain shortages](https://longbridge.com/en/news/295672619.md) - [Canadian electricity utility Hydro One Q2 revenue, profit rise on higher OEB-approved rates, peak demand](https://longbridge.com/en/news/295654756.md) - [Chile power transmitter Transelec rebuilds storm-collapsed Romeral-Incahuasi line by Aug. 15 deadline](https://longbridge.com/en/news/295688326.md) - [Equatorial Maranhão board boosts Equatorial stake by R$ 7.76 million in market buys](https://longbridge.com/en/news/295444883.md)