00902 Overview

JPMorgan's Downgrade: JPMorgan has downgraded CHINA RES POWER from Overweight to Neutral and reduced its target price, while maintaining an Underweight rating for HUANENG POWER with a lower target price.

Impact of Price Floor Removal: The removal of the electricity price floor is expected to lead to further declines in on-grid electricity prices for thermal power, potentially compressing profit margins for these companies.

Uncertainty in Tariff Mechanism: Despite the Chinese government's mention of improving the capacity tariff mechanism, there is significant uncertainty regarding its effectiveness and implementation timing.

Negative Earnings Outlook: The earnings outlook for thermal power plants is unfavorable, with market forecasts and dividend predictions facing downside risks.

Challenges in China's Power Industry: HSBC Research indicates that China's power industry will experience weakened growth momentum in the first year of the 15th Five-Year Plan due to declining electricity prices, a slowdown in new installations, and a stabilizing policy environment.

Downgrades and Ratings: HSBC has downgraded HUANENG POWER from Hold to Underweight and CHINA RES POWER from Buy to Hold, reflecting concerns over their earnings forecasts.

Optimism for CHINA LONGYUAN: The report expresses optimism for CHINA LONGYUAN, anticipating that its earnings growth will lead the industry, driven by strong performance in wind resources.

Attractive Dividend Yields: CHINA POWER is projected to have a 5.8% dividend yield in FY26, while CHINA YANGTZE POWER is expected to yield about 3.7%, making them attractive options among their peers.

Citi Research Downgrade: Citi Research downgraded HUANENG POWER's H-/A-shares from Buy to Sell, reducing target prices from $7.2/RMB10 to $4.5/RMB6.25.

Profit Expectations: The broker anticipates that HUANENG POWER's net profit will peak in 2025 and decline in 2026-2027 due to significant tariff reductions and limited decreases in unit coal costs.

Return on Equity: The expected return on equity for 2025 is projected at 9.8%, the highest since 2015, but the company may encounter downside risks.

Short Selling Data: As of January 16, 2026, short selling amounted to $34.66 million with a ratio of 11.524%.

Citi's Research Report: Citi has added HUANENG POWER (00902.HK) to its 30-day downside catalyst watchlist due to anticipated declines in market base electricity prices for 2026, which are expected to fall below market expectations.

Electricity Sales and Tariffs: The report indicates that 63.5% of HUANENG POWER's electricity sales in 1-3Q25 are from Guangdong, Zhejiang, and Jiangsu, where the average market base tariff is projected to decrease by 13.4% YoY in 2026.

Coal Power Capacity Growth: China's coal power plants are expected to see a 65% YoY increase in electricity production capacity, leading to an estimated 8.9% YoY drop in HUANENG POWER's average coal electricity tariff in 2026.

Target Price and Rating: HUANENG POWER has been assigned a target price of HKD7.2 and a Buy rating by Citi, despite the challenges posed by declining tariffs and increased production capacity.

Electricity Tariffs and Project Insights: By the end of 2025, electricity tariffs bidding results for 25 provinces in China were released, indicating that high-quality regional projects remain profitable despite a smaller release scale, with current policies favoring wind power growth.

Focus on Industry Leaders: CICC recommends focusing on industry leaders with significant wind power portfolios and strong operational capabilities, as they are likely to benefit from the supportive policies.

Project Distribution Statistics: The five major power centralized photovoltaic and wind power projects accounted for 19% and 22% of incremental projects, respectively, with HUANENG POWER, State Power Investment Corporation, and DATANG RENEW leading in resource acquisition.

Impact of Development Strategies: The development focus may shift towards new energy large bases, while the ranking of new installations for conventional projects could be affected by the "15th Five-Year Plan" and the release of resources in advantageous regions.

Top Net Buys: The top 10 Hong Kong stocks with the highest net buys by southbound funds include XIAOMI-W, CNOOC, and MEITUAN-W, with significant short selling ratios and varying net inflow amounts.

Top Net Sells: The top 10 Hong Kong stocks with the highest net sells by southbound funds feature SMIC, TENCENT, and HUA HONG SEMI, showing substantial short selling activity and notable net outflow amounts.