Based on energy security, focus on sector investment value:

There are two main lines of energy security: electricity security and new energy consumption. China's electricity demand grew rigidly during the “14th Five-Year Plan” period, and there was a tight balance between electricity supply and demand in 2024. Renewable energy accounts for more than 50% of installed capacity, reaching 1.742 billion kilowatts. Among them, hydropower, wind power, and solar energy are steadily increasing, and new energy consumption and supply are being promoted in parallel.

Thermal power: The characteristics of flexible support power supplies are highlighted, and profit repair is shifting to valuation repair. Thermal power was transformed from a baseload power supply to a regulated power source, and revenue changed from a single electricity price to “electricity+capacity+auxiliary services”, and the capacity price covered fixed costs. The ancillary services market is growing rapidly, and compensation revenue such as peak shifting and frequency modulation has increased significantly, helping to improve system flexibility.

Hydropower: Outstanding dividend advantages. Hydropower companies show a profit advantage with high dividends and stable electricity prices. They have asset-heavy attributes, high upfront investment, lower costs in the later stages, and gradual increase in profitability and cash flow. They are high-quality investment targets in a low interest rate environment.

New energy: The bottom of the policy is in place, and the layout is on the left. The rapid growth of new energy installations has increased consumption pressure and constrained industrial development; full coverage of green license transactions and accelerated connectivity with the carbon market will help release green production capacity, but problems such as deduction ratios and repeated calculation need to be solved.

Nuclear power: Accelerate development and embrace certainty. The rising status of nuclear power in the new power system will help the “dual carbon” goal.

The non-ferrous industry is also showing a good development trend. Since 2024, the non-ferrous metals industry as a whole has shown a good development trend of production growth, accelerated investment, and active imports and exports.

Analysis of the investment value of the Modern Energy Index of central enterprises

1. The Central Enterprise Modern Energy Index (932037.CSI) was officially released on November 16, 2022. The index was customized by Guoxin Investment Co., Ltd., and mainly selected 50 listed company securities involving modern energy industries such as green energy, fossil energy, and energy distribution under the State Council as an index sample to reflect the overall performance of central enterprise modern energy-themed listed company securities.

2. Judging from the CITIC Tier 1 industry distribution, the constituent stocks of the Central Enterprise Modern Energy Index, it is mainly concentrated in industries such as electricity and utilities, power equipment and new energy, petroleum and petrochemicals, and non-ferrous metals. Judging from the concepts involved in index constituent stocks, central enterprise modern energy index constituents are highly exposed to concepts such as state-owned enterprise integration, central enterprise market, and industry leaders. The profitability of the Central Enterprise Modern Energy Index is outstanding, and the index's profit is expected to grow rapidly in the future.

ICBC China Securities Guoxin Central Enterprise Modern Energy ETF Fund Investment Value Analysis ICBC China Securities Guoxin Central Enterprise Modern Energy ETF (abbreviation: Energy ETF, fund code: 561260).

The fund was established on July 27, 2023. The fund's investment goal is to closely track the underlying index, seek to minimize tracking deviations and tracking errors, and strive to achieve long-term investment returns consistent with the performance of the underlying index. The ICBC China Securities Guoxin Central Enterprise Modern Energy ETF Fund is managed by Mr. Shi Baoyi. The fund manager has rich experience in passive product investment management.

Risk warning: This report objectively analyzes specific fund products from a historical statistical perspective. When the market environment or fund strategy changes, there is no guarantee that the statistical findings will continue in the future. The report mentioned that there may be deviations in estimating the size of the industry space. This report does not constitute a recommendation for fund products.