China Galaxy Securities: Thermal power generation growth turns positive, electricity consumption growth accelerates.

China Galaxy Securities released a research report stating that it is optimistic about the thermal power sector with policy catalysts, continuous performance improvement, and valuation potential for growth; long-term optimism for the hydropower and nuclear power sectors with high performance certainty and strong dividend capabilities. New energy is already in the bottom range. Individual stocks to watch include Huaneng Power International, Inc. (600011.SH), Anhui Wenergy (000543.SZ), Sichuan Chuantou Energy (600674.SH), China Yangtze Power (600900.SH), CGN Power Co., Ltd. (003816.SZ). The main points of China Galaxy Securities are as follows: Event: The National Energy Administration and the National Bureau of Statistics released statistics on the electricity industry and energy production: from January to August, the national wind power installed capacity increased by 33.61GW, a year-on-year growth of 16%; the national CECEP Solar Energy added 139.99GW of installed capacity, a year-on-year growth of 24%; the national thermal power added 28.59GW of installed capacity, a year-on-year decrease of 17%. From January to August, the national power consumption was 65.619 billion kilowatt-hours, a year-on-year growth of 7.9%. In August, wind power installed capacity achieved high growth, and CECEP Solar Energy installed capacity remained steady. In August, the newly installed capacity of wind power and CECEP Solar Energy was 3.7GW and 16.46GW respectively, with year-on-year growth rates of 41.8% and 2.9%; by the end of August, the cumulative installed capacity of wind power and CECEP Solar Energy was 1226GW, a year-on-year growth of 36.1%, accounting for 39.2% of the national cumulative installed capacity. The State Grid Energy Research Institute predicts in the "CHINA POWER Supply and Demand Analysis Report 2024" that the annual wind power installed capacity will increase by 90GW, a year-on-year growth of 16.5%; CECEP Solar Energy installed capacity will further increase on the high base of 2023, reaching 240GW, a year-on-year growth of 8.8%, breaking through 200GW for two consecutive years. After renewable energy installed capacity surpassed fossil energy in 2023, its proportion will continue to increase, and the installed structure will continue to optimize. In August, hydropower generation plummeted, and thermal power generation growth turned positive. In August, the electricity generation of large-scale industries was 907.4 billion kilowatt-hours, a year-on-year growth of 5.8%, accelerating by 3.3 percentage points compared to July; in August, large-scale industrial thermal/hydropower/nuclear power/wind power/CECEP Solar Energy generation increased by 3.7%/10.7%/4.9%/6.6%/21.7%, among which the growth rate of thermal power generation in August increased by 8.6 percentage points compared to July, achieving a positive growth for the first time since May; the growth rate of hydropower generation in August decreased significantly by 25.5 percentage points compared to July. Considering that water inflow has turned from dry to sufficient since August last year, it is expected that the growth rate of hydropower generation in the fourth quarter will enter a downtrend, the squeezing effect on thermal power generation will weaken, and the growth rate of thermal power generation is expected to continue to rise. In August, the growth rate of electricity consumption accelerated, with high temperatures leading to a significant increase in electricity consumption in the tertiary industry and residential life. In August, the total electricity consumption was 964.9 billion kilowatt-hours, a year-on-year growth of 8.9% (compared to a 5.7% increase in July), an increase of 3.2 percentage points from July. The electricity consumption of the primary/secondary/tertiary/residential life sectors were 149/567.9/190.3/191.8 billion kilowatt-hours, with year-on-year growth of 4.6%/4.0%/11.2%/23.7%, compared to changes in July of +3.1 percentage points/-1.0 percentage points/+3.4 percentage points/+17.8 percentage points. August economic data were weak, with industrial added value increasing by 4.5%, a decrease of 0.6 percentage points from July, and the year-on-year total retail sales of consumer goods increasing by 2.1%, a decrease of 0.6 percentage points from July. We believe that the significant increase in electricity consumption in the tertiary industry and residential life sectors in August is mainly due to the impact of high temperatures. According to data from the China Meteorological Administration, the national average temperature in August was 22.6C, 0.65C higher than the same period last year, and 1.5C higher than the historical average since 1961. Investment advice: We are optimistic about the thermal power sector with policy catalysts, continuous performance improvement, and valuation potential for growth throughout the year; we are long-term optimistic about the hydropower and nuclear power sectors with high performance certainty and strong dividend capabilities. New energy is already in the bottom range. Individual stocks to watch include Huaneng Power International, Inc., Anhui Wenergy, Sichuan Chuantou Energy, China Yangtze Power, CGN Power Co., Ltd. Risk warning: Risks of the installed capacity being lower than expected; risks of a sharp rise in coal prices; risks of a reduction in on-grid electricity prices; risks of intensified industry competition, etc.