Citi: CGN POWER (01816) 2027 Earnings Growth Expected to Be Driven by Potential Guangdong Power Price Increases

Citi issued a research report stating that among the China and Hong Kong utility stocks it covers, the bank favors natural gas companies with upstream-oriented business layouts, including ENN ENERGY (02688), KUNLUN ENERGY (00135), and HK & CHINA GAS (00003); in the solar sector, it prefers Suzhou Maxwell Technologies (Maxwell) due to its rising share of semiconductor equipment business; in the independent power producer sector, it is more bullish on CGN POWER (01816), expecting 2027 earnings growth to be driven by potential Guangdong power price increases. In natural gas, China's weekly natural gas consumption fell 2.6% year-on-year amid weak demand from the industrial, chemical, and power generation sectors. Due to the lagged impact of rising unit gas source costs, the bank expects unit profit margins in the retail natural gas business to narrow quarter-on-quarter in the third quarter of 2026, with unit gas source costs lagging spot LNG prices by 4 to 5 months. In solar, despite continued weak downstream demand, China's polysilicon and solar glass prices rose 0.2% to 0.5% quarter-on-quarter versus the prior week. In independent power producers (IPPs), affected by tight supply, Qinhuangdao spot coal prices rose 2% quarter-on-quarter versus the prior week and 34.5% year-on-year, reaching RMB 1,038/ton. This implies that unit fuel costs for China's coal-fired independent power producers will rise year-on-year in the second half of 2026.