Zhixin Financial APP learned that GTJA released a research report stating that it maintains a "shareholding" rating on the electrical utilities industry. In 2025, the risk of a downward trend in long-term electricity prices is limited, and electrical assets are expected to usher in a new round of value reassessment with the stability verification of electricity prices: 1) Coal-fired power companies in areas with tight supply and demand imbalance: In provinces such as the CNI Yangtze Index, there is a tight supply and demand imbalance in electricity, and the situation of long-term electricity price contracts is expected to be better than the national average; 2) Coal-fired power generation companies: After the vertical integration of the industry chain layout, the main risk exposure is concentrated on the price end, and profitability stability is higher during the stable electricity price period; 3) Hydroelectric & nuclear power: Stable commercial models of high-quality power sources.

GTJA's main opinions include:

Economic considerations are not the only demand of electricity policies, with long-term electricity commodity prices rising higher than all industrial products. Reviewing more than 40 years of electricity mechanism reform and price history since 1980, the bank believes that policies in the electricity industry have always balanced between the "ensure supply's safety" (eliminating the risk of "power shortage", ensuring sufficient power supply) and "low electricity prices" (rather than the traditional stereotype - the core demand of policies on the electricity industry is to reduce electricity prices), and when the two conflict, the importance of electricity safety far exceeds that of low prices. The bank uses our country's electricity industry PPI data as a quantitative indicator for measuring price changes, with our country's electricity industry PPI base index rising by +558% from 1979 to 2023, compared to the overall industrial product PPI base index +197 ppts.

The construction of a new type of electricity system heralds a new era: "lowering electricity prices" is no longer the core contradiction. The bank believes that in the process of constructing a new electricity system dominated by new energy sources, the challenge of secure electricity supply is resurfacing:

1) In recent years, there have been orderly electricity usage occurrences in some regions during the peak winter and summer periods;

2) The proportion of new energy installations continues to increase, highlighting more prominent system balance and security issues;

Energy prices are still at a relatively high level in a long-term cycle.

The bank believes that the current government's priority for the electrical utilities industry has shifted to "ensuring supply security" and "low-carbon transformation", and "reducing electricity prices" is no longer the core policy contradiction.

Electrical utilities' profitability has not yet returned to historical average levels, but there is a need to strengthen the construction of traditional power sources such as thermal power to meet the safety requirements of the electrical system. Policies need to ensure reasonable expected returns for thermal power and other projects to stimulate the enthusiasm of electrical utilities for investment.

Electrical utilities still need to enhance capital expenditures on new energy to meet the needs of clean and low-carbon transformation.

Reducing electricity prices is not the only way to reduce costs. There is limited downside risk to the long-term coal-electricity contract price decrease by 2025. The bank believes that local governments' core demand for electricity prices is to reduce the electricity costs for local industrial and commercial users to ensure competitive advantage.

Risk factors: lower-than-expected electricity demand, new energy profits below expectations, electricity prices lower than expected, coal prices higher than expected, slower-than-expected progress in electricity market liberalization, etc.