UBS: The comprehensive market-oriented policy on the grid electricity price for new energy sources is strategically positive. China Longyuan Power Group Corporation (00916) is the top choice.

UBS released a research report stating that the price-to-book ratio of the covered Chinese renewable energy independent power plants is currently close to historical lows. They reiterated that China Longyuan Power Group Corporation (00916) is their top pick in the industry, believing that it may be the main beneficiary of the policies announced in this round, while other types of independent power plants (coal, nuclear) may have limited impact. UBS is slightly optimistic about the overall assessment, citing reasons such as estimating a 1% to 2% upside potential in total profits for renewable energy independent power plants; initial interpretation indicating policy direction supporting industry stability; and although there are some uncertainties in the price levels of Contract for Difference (CfD) contracts, they believe overall investment certainty and expected returns may improve. UBS believes that investors overall have a negative view of the industry, as many expect electricity prices to decrease during the accelerated transition to market trading, which is consistent with the policies announced in this round. However, the bank sees the introduction of CfD contract price mechanism as a positive surprise, which could reduce risks associated with zero or negative spot electricity prices.