Guosheng: In November, the social electricity consumption and power supply increased year-on-year. It is recommended to focus on the leading companies in the flexible transformation of thermal power.

Guosheng released a research report stating that the National Energy Administration released the electricity consumption situation for the first 11 months, and the National Bureau of Statistics announced the energy production situation for November. Electricity consumption for the first 11 months and in November increased year-on-year; on the supply side, electricity production in November remained stable, with significant acceleration in wind and solar power. It is recommended to focus on high-dividend thermal power leaders and relatively stable electricity prices & coal-electricity integration enterprises, as well as leaders in flexible transformation of thermal power, while also taking advantage of defensive water and nuclear power, and paying attention to high-quality leaders in the gas sector for profit recovery and stable dividends. Key points from Guosheng: Demand side: Electricity consumption for the whole society grew by 6.2% year-on-year in November According to data released by the National Energy Administration, from January to November, total electricity consumption in the whole society reached 94.602 billion kilowatt-hours, a year-on-year increase of 5.2%, with the electricity consumption by large-scale industrial enterprises reaching 88.567 billion kilowatt-hours. In November, total electricity consumption in the whole society was 835.6 billion kilowatt-hours, a year-on-year increase of 6.2%. Overall, in November, the third industry and urban and rural residents' electricity consumption increased relatively rapidly, driven significantly by charging and replacing services, as well as the information transmission, software, and information technology service industry. Electricity demand in the primary industry maintained steady growth, with a 7.9% year-on-year increase in electricity consumption for November and a 10.3% year-on-year increase from January to November. The growth rate of electricity consumption in the secondary industry slowed down compared to the previous month, with a 4.4% year-on-year increase in electricity consumption for November and a 3.7% year-on-year increase from January to November, with the electricity consumption of high-tech and equipment manufacturing industries (+6.4%) leading the way. The electricity consumption in the tertiary industry showed strong growth, with a 10.3% year-on-year increase in electricity consumption for November and an 8.5% year-on-year increase from January to November, with charging and replacement services, as well as information transmission, software, and information technology services becoming the main driving force, with growth rates of 60.2% and 18.9% respectively in November. Electricity consumption for urban and rural residents' life increased due to peak demand in winter, with a 9.8% year-on-year increase in electricity consumption for November and a 7.1% year-on-year increase from January to November. Supply side: Electricity production remained stable in November, with significant increase in wind and solar power generation Overall, electricity production in large-scale industries continued to grow. In November, electricity production in large-scale industries reached 779.2 billion kilowatt-hours, a year-on-year increase of 2.7%; with a daily average electricity production of 259.7 billion kilowatt-hours. From January to November, electricity production in large-scale industries reached 88.567 billion kilowatt-hours, a year-on-year increase of 2.4%. Looking at the different types of electricity, in November, electricity production in large-scale industrial thermal power decreased from growth to decline, hydropower grew rapidly, nuclear power and CECEP Solar Energy power generation speeds increased, and wind power production shifted from decline to growth. Specifically, in November, electricity production in large-scale industrial thermal power decreased by 4.2% year-on-year, in contrast to a 7.3% increase in October; hydropower production in large-scale industries increased by 17.1%, with a growth rate slowing down by 11.1 percentage points compared to October; nuclear power production in large-scale industries increased by 4.7%, with a 0.5 percentage point faster growth rate compared to October; wind power production in large-scale industries increased by 22.0%, compared to a 11.9% decrease in October; and production by large-scale industrial CECEP Solar Energy increased by 23.4%, with a 17.5 percentage point faster growth rate compared to October. Investment recommendations It is recommended to focus on high-dividend thermal power leaders and electricity price stability & coal-electricity integration enterprises: Huaneng Power International, Inc.(A+H), Huadian Power International Corporation (A+H), GD Power Development, DATANG POWER, Inner Mongolia Mengdian Huaneng Thermal Power Corporation, Shaanxi Energy Investment; as well as leaders in flexible thermal power transformation: Qingdao Daneng Environmental Protection Equipment, Wuxi Huaguang Environment & Energy Group. It is also recommended to pay attention to the wind power and photovoltaic sectors: CHINA SUNTIEN, China Longyuan Power Group Corporation, Zhongmin Energy, etc. To grasp the defense of water and nuclear power, it is recommended to pay attention to China Yangtze Power, Sichuan Chuantou Energy, China National Nuclear Power, and CGN Power Co., Ltd. In the gas sector, it is recommended to focus on high-quality leaders in profit recovery and stable dividends: ENN ENERGY, KUNLUN ENERGY, CHINA RES GAS. Risk Warning: 1. Delay in construction progress of thermal power plants. 2. Increase in coal prices. 3. Uncertain policies in the electricity auxiliary service market.