Citibank has released a research report, raising its forecast for China's electricity demand growth this year from a previous 6% year-on-year to 7.5%, and next year's forecast to grow by 7%. The expected higher growth in electricity demand will mainly come from charging services, electrical machinery and equipment manufacturing, rare earth metal smelting, and the development of the railway transportation industry related to artificial intelligence and electrification, which is expected to benefit power grid equipment suppliers in increasing capital expenditures and improving coal-fired power plant utilization rates. The first choices are Henan Pinggao Electric (600312.SH), Sieyuan Electric (002028.SZ), and China Res Power (00836.HK).
The bank believes that the increasing application of artificial intelligence directly drives higher growth in electricity demand. It is estimated that the relative growth rate of China's electricity demand to GDP growth has increased from an average of 0.86 times in the past ten years to 1.27 times from 2020 to 2023, and further increased to 1.8 times in the first quarter of this year, mainly due to changes in economic structure and faster growth in industries such as artificial intelligence, electric vehicles, and automation.
Citibank currently gives a buy rating to Run Time Electric with a target price of 25.5 yuan. For the latest investment ratings and target prices of other electric power stocks, please refer to the table.