"Big Banks" JP Morgan: The mainland photovoltaic industry is driven by optimistic sentiment; stock selection should focus on profit growth prospects; be cautious about the gas sector

JP Morgan published a research report on the mainland public utility sector. The bank stated that last year, the procurement capacity of offshore wind power units in the mainland reached 8.42 gigawatts, with MYSE (601615.SH) ranking first with 2.1 gigawatts, while Goldwind (02208.HK) ranked fourth with 1.2 gigawatts. Driven by positive sentiment surrounding commercial space and solar energy development, the stock prices of both companies have significantly risen at the beginning of this year. In the upstream wind power sector, the bank recommends that investors shift their focus to NBO (603606.SH).

Additionally, driven by optimistic sentiment regarding space solar energy and commercial aerospace development, the A-share photovoltaic industry index has significantly outperformed the market. The bank suggests that stock selection should still focus on companies with strong profit growth prospects, such as NBO, Daqo Energy (DQ.US), and GCL TECH (03800.HK). Furthermore, China's energy storage system installation capacity surged by 73% year-on-year last year, and Sungrow Power (300274.SZ) is expected to benefit from policy reforms and rising demand in the high-end market.

The bank maintains a cautious view on China's gas utility sector, mainly due to weak growth in industrial gas consumption, limited margin improvement, and a continuous decline in new connections. The warm winter in the fourth quarter of last year also led to a slight increase in natural gas sales, and the bank expects that some companies may not meet their annual gas consumption guidance for 2025. Kunlun Energy (00135.HK) is the only company in the sector actively engaged in capital recovery and is the bank's industry preference. At the same time, the bank holds a cautious attitude towards China Resources Gas (01193.HK) due to its slow share repurchase progress and weak operational trends