HK Stock Market Move | Electricity stocks continue to decline, while coal prices have increased both month-on-month and year-on-year during this period. The net profit of thermal power companies in the second quarter may be under pressure compared to the same period last year.

Power stocks continue to decline. As of the time of writing, Huaneng Power International, Inc. (00902) fell by 4.71% to 5.76 Hong Kong dollars; Huadian Power International Corporation (01071) fell by 3.19% to 3.95 Hong Kong dollars; China Longyuan Power Group Corporation (00916) fell by 2.64% to 5.17 Hong Kong dollars. In terms of news, according to data from the National Bureau of Statistics, the year-on-year increase in thermal power generation in China in April and May 2026 was +3.1%/+2.1%. Considering a month's inventory, the average closing price of Qinhuangdao power coal in the second quarter of 2026 was 781 yuan/ton, up 19.5% year-on-year and 9.6% month-on-month. Huatai pointed out that considering the increase in coal prices year-on-year, and the downward trend in the comprehensive price of long-term power contracts in various regions in 2026, the net profit attributable to the parent company of major thermal power companies in the second quarter may be under pressure year-on-year. Sinolink, on the other hand, stated that looking forward to the second quarter, the market is overly concerned about the rise in coal prices, but at the same time, it weakens the profit correction ability brought by the monthly increase in spot electricity prices. We believe that thermal power will experience a bottoming out in fundamentals, focusing on the enhancement of profitability stability and the value re-evaluation brought by increased dividends.