Yamato: The long-term electricity price results in Guangdong Province in 2025 did not meet market expectations, affecting the earnings per share of CGN POWER (01816) next year.

Daiwa released a research report stating that Guangdong Province announced the long-term electricity price for next year, with an average electricity price of 391.9 RMB per megawatt-hour, a year-on-year decrease of 15.9%, and a discount of 13.5% compared to the local benchmark electricity price. Although the market had plenty of negative expectations before, the results may be very different from what the market expected. For local coal power plants, the outlook is not optimistic as a large-scale reduction in electricity prices may offset all unit profits next year. Daiwa expects that CGN POWER (01816) will also be affected next year, with earnings per share falling by 3.8% to 8.9% RMB, implying a dividend yield of approximately 3.4%. However, with the removal of uncertainty in the yield spread between domestic 10-year treasury bond rates and electricity price results, there may still be some attractiveness for certain long-term funds.