HK Stock Market Move | Electricity stocks across the board are declining, and the price of thermal coal has reached a new high for the year, which may directly affect the profitability of thermal power enterprises.

Electricity stocks across the board are falling. As of the time of writing, Huadian Power International Corporation (01071) fell by 6.31% to HKD 4.16; China Longyuan Power Group Corporation (00916) fell by 4.01% to HKD 7.43; Huaneng Power International, Inc. (00902) fell by 2.64% to HKD 5.91; CHINA RES POWER (00836) fell by 2.2% to HKD 18.66. On the news front, as of March 27th, the port coal price increased by +26 RMB/ton to 761 RMB/ton, reaching a new high for the year. Regarding power plant inventory, the inventory of the six major power plants decreased by 391,000 tons to 12.75 million tons compared to the previous week, a decrease of 775,000 tons from the same period last year. Although daily consumption has increased, and purchases are maintaining a just-in-time rhythm, there is a clear reduction in power plant inventory. It is reported that coal is still the main variable cost for thermal power enterprises. If coal prices rise significantly, it will directly affect the profitability of thermal power enterprises. GF SEC released a research report stating that in terms of electricity prices, the expected downward adjustments under long-term contracts have been fully anticipated. The recent rebound in coal prices is beneficial for monthly and spot prices. On the supply and demand side, the slowdown in the growth rate of thermal power and green power installations, as well as the continuous AI demand exceeding expectations, are expected to alleviate the previous pessimistic expectation of oversupply of electricity. The acceleration of electricity system reform, expansion of spot trading, capacity-based electricity prices + ancillary services, green certificates, and other factors are improving the integration of wind and solar power. In terms of capital expenditures, the peak investment period has passed, free cash flow has improved, and dividend expectations have increased.