JP Morgan upgrades CGN POWER (01816) rating to "overweight" with a target price of 4.5 Hong Kong dollars.

J.P. Morgan released a research report stating that China's nuclear power industry is benefiting from the improving electricity pricing mechanism, and recent policy changes at the central and local levels (including Guangzhou, Liaoning, and Guangxi) are favorable for industry development. The global nuclear energy revival, coupled with the scarcity of nuclear power assets and a more favorable regulatory environment, is driving the revaluation of CGN POWER (01816). The firm has upgraded its rating on CGN POWER from "Neutral" to "Buy" and raised its target price from 2.9 Hong Kong dollars to 4.5 Hong Kong dollars. The firm pointed out that Liaoning province has launched a one-year trial mechanism for nuclear power Contract for Difference (CfD) this year. Guangxi has also introduced fees for end users under its CfD for nuclear power, indicating that its CfD policy will soon be announced. The firm assumes that in the mid-term, CfD will cover about 70% of nuclear power sales, driving a 1.5% and 1% increase in comprehensive electricity prices in 2026 and 2027, respectively. As a result, the firm has raised its profit forecast for CGN POWER in 2026 and 2027 by 5% to 8%.