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Securities Times reporter Zhu Tingwu

Since the beginning of this year, the power sector is undoubtedly one of the strongest sectors in the A-share market. The power index has risen by more than 14% this year, and the latest rolling price-earnings ratio is 18.4 times. The share prices of power stocks such as China General Nuclear Power, Sichuan Investment Energy, Huaneng Hydropower and Yangtze Power have repeatedly hit historical highs.

Recently, the share price of China National Nuclear Power hit a nine-year high. Judging from the trend of the secondary market, power stocks continue to attract market attention as the market continues to fall.

Five factors help

Power stocks continue to strengthen

The rise in the power industry is mainly affected by five factors:

The first is policy support, including the release of the Basic Rules for the Operation of the Electricity Market, which aims to accelerate the construction of a unified national electricity market and promote electricity market reform.

Second, the relationship between supply and demand. According to data released by the National Energy Administration a few days ago, in the first half of this year, the total electricity consumption of the whole society was 4657.5 billion kWh, an increase of 8.1% year-on-year, of which the electricity consumption of urban and rural residents was 675.7 billion kWh, an increase of 9% year-on-year. The China Electricity Council released the "Analysis and Forecast Report on the National Electricity Supply and Demand Situation in the First Half of 2024", which predicts that the total electricity consumption of the whole society in 2024 will be 9.82 trillion kWh, an increase of about 6.5% year-on-year. In 2024, the total electricity consumption of the whole society will continue to grow, which will provide support for the power sector.

The third is the development of smart grids. With the proposal of the country’s “dual carbon” goals, the development of smart grids, as an important part of the new power system, has received attention.

Fourth, the expectation of market-oriented reform. The expectation of market-oriented reform of electricity is one of the most important reasons for the recent surge. Dongwu Securities said that from the dividend logic to the price marketization stage, price reform is not only a one-time elasticity, but also promotes predictable "growth", "return rate" and "dividends".

Fifth, performance is expected to increase. Benefiting from the continued growth in electricity consumption, the performance of listed companies in the power industry is generally expected to increase, and the valuation recovery expectations are high.

Publicly offered funds hold a large position

9 Electric Power Stocks

The second quarter reports of public funds this year have all been disclosed.

According to the Securities Times Databao statistics, public funds hold nine power stocks. At the end of the second quarter, the Yangtze Power Fund held a market value of nearly 38 billion yuan, and its holdings increased by 228.0111 million shares month-on-month. In addition, the holdings of power stock funds such as China General Nuclear Power, Guodian Power, and Datang Power all changed by more than 10 million shares.

At the end of the second quarter, 706 funds managed by 107 fund management companies held a total of 1.313 billion shares of Yangtze Power, accounting for a total of 5.47% of the shares. Among them, the funds under China Asset Management, E Fund Management, and Huatai-PineBridge Fund held Yangtze Power shares with a market value of 8.62 billion yuan, 5.356 billion yuan, and 4.223 billion yuan respectively.

From the perspective of fund products, Hua Xia SSE 50 ETF and Hua Xia CSI 300 ETF managed by Hua Xia Fund, E Fund CSI 300 ETF and E Fund Enhanced Return A under E Fund Management, as well as Huatai-PineBridge CSI 300 ETF, Harvest CSI 300 ETF and Orient Red Qiheng Three-Year Holding A all hold shares of China Yangtze Power with a market value of over 1 billion yuan.

In addition, China General Nuclear Power also won the favor of 147 funds at the end of the second quarter, holding 618 million shares, an increase of 173 million shares from the previous quarter. Since the second quarter of this year, China General Nuclear Power's share price has risen by more than 30%.

72 electric power stocks

Dividends for the year exceeded 64 billion yuan

According to Databao statistics, 39 power stocks have announced their first-half performance forecasts so far, with more than 70% of them having good performance forecasts. Six power stocks, including Guodian Power, Datang Power Generation, Jiangsu Guoxin, and Guiguan Power, are expected to make profits of more than 1 billion yuan in the first half of the year.

In terms of growth rate, 14 electric power stocks are expected to double their performance, among which the lower limit of the year-on-year growth rate of net profit of Three Gorges Water Conservancy is as high as 564.55%, making it a dark horse among many electric power stocks.

Judging from the latest closing prices, the dividend yields of 20 electric power stocks including Bao New Energy, Linyang Energy, Guangdong Construction Engineering, Shenhua Energy, and Lianmei Holdings are all over 3%.

So far, 72 power stocks have paid dividends for their 2023 profits, with a total dividend of 64.2 billion yuan. There are 13 power stocks with dividends exceeding 1 billion yuan, among which China Yangtze Power has a dividend of 20.064 billion yuan, ranking first.

In terms of dividend rate, the dividend rates of 22 power stocks including Guangxi Energy, Guiguan Power, Desen Shares, Jiantou Energy, Jingneng Power, and Lianmei Holdings all exceed 50%. In response to the call of the new "Nine National Policies" and related policies, Guotou Power will increase the annual cash dividend ratio from 50% to 55% in 2023. Lianmei Holdings has also paid dividends recently, with a total cash dividend of 447 million yuan and a dividend rate of 52.02%.

Among the above-mentioned power stocks with dividend rates exceeding 50% and valuations below 20 times, 11 stocks including SDIC Power, Zhejiang Energy Power and Lianmei Holdings were unanimously favored by three or more institutions. China Galaxy Securities believes that the overall performance of the power sector is highly certain and has strong dividend capacity. It will continue to benefit from the reform of central state-owned enterprises in the future and continues to be optimistic about the long-term investment value of the power sector.

(This edition’s special data is provided by the Securities Times Center Database. Peng Chunxia/Chart)