Guolian: The performance of the water and electricity sector has increased significantly, with stable operations and growth potential for operators.

Guolian released a research report stating that under the background of electricity reform, the profitability of various power sources is steadily increasing, and operators are moving towards a public utility attribute. In terms of thermal power, performance is recovering, with profits and scale increasing in the first half of the year. Cost improvements may make the profitability of thermal power in 2024 significantly higher. The scarcity of spot electricity prices, capacity electricity price recovery costs, and auxiliary service compensation promote the stability of thermal power revenue. Regarding new energy, revenue increases with scale growth, but profits are under pressure due to absorption constraints. As absorption issues are gradually resolved, the environmental value of new energy electricity prices is expected to become more prominent. In terms of hydropower and nuclear power, profitability remains stable with outstanding dividend asset attributes. Hydropower has benefited from high performance in the first half of the year, with reduced depreciation and interest costs leading to gradually released profits. For nuclear power, the approval of 11 new nuclear power units by August 2024 suggests a continued high prosperity, and the growth of nuclear power operators can be expected. Electricity Industry: Leading in Industry Growth, Positive Fundamentals By the end of August, out of 30 industries classified by Citic Securities, six industries saw index gains, with the power and utilities industry having an overall increase of 6.8%, ranking sixth. On the generation side, thermal/hydropower/nuclear power generation increased by +0.5%/+24.5%/+0.8% respectively year-on-year. On the consumption side, the cumulative total electricity consumption for the entire society from January to July 2024 was approximately 5.6 trillion kWh, with a year-on-year increase of 7.7%, indicating a positive trend in electricity demand. Thermal Power: Performance Recovery, Profitability and Scale Growth In the first half of 2024, thermal power operators achieved operating revenue of 586.48 billion yuan, a year-on-year decrease of 2.35%, and a net profit attributable to the parent company of 41.47 billion yuan, an increase of 42.9% year-on-year. In the second quarter of 2024, operating revenue was 273.05 billion yuan, a year-on-year decrease of 8.4%, and a net profit of 22.14 billion yuan, an increase of...