厄尔尼诺炎热夏季推动电力需求？上调中国广核至买入评级

Power up withElNiñohot summer?Upgrade CGN Power to Buy Rating Change 04 June 2026 Selective with summer boost; prefer nuclear over thermalHigher energyprices, El Niño and direct power connection have boosted the IPP sector, EquityHK/ChinaUtilities with H-shares rising c.15% on average over the past month, led by thermal. However, wethink higher coal costs will outweigh potential tariff increases, driving lower thermal powerearnings, while current valuation is pricing in flattish to modest increases in tariffs. Greenpower direct supply remains too small with uncertain economics to support earnings.Hence, we stay Underperform in Huaneng, Huadian and Longyuan Power. We are moreconfident about earnings recovery in nuclear and upgrade CGN Power to Buy with policysupport in tariff, manageable fuel cost, and attractive valuations at 12x mid-27E PE. Gary Tsang>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 6825gary.tsang@bofa.com Charlotte Xia>>Research AnalystMerrill Lynch (Hong Kong)charlotte.xia@bofa.com Weather-related boost to power up sentiment As we mentioned in ourPower Pulsereport, CMA said El Niño could cause nationwidetemperatures to be hotter than usual, although weather forecasts so far for Jun-Jul stilllook to be below averages. Rainfall is forecast to decline YoY in Jun. A hot and drysummer could support power demand, especially baseload like thermal. Cissy Guan>>Research AnalystMerrill Lynch (Hong Kong)cissy.guan@bofa.com Key terms: Higher coaloutweighs tariff increases, cautious thermal CMA:China Meteorological AdministrationCPID: China Power InternationalDevelopmentCRP: China Resources PowerHDP: Huadian PowerHNP: Huaneng PowerIPP:Independent Power Producer Higher energy prices and weather have boosted spot power tariffs since April mainly inSouthern China. But these tariffs are moderating and national trend is still diverging.Potential higher-for-longer coal price post Shanxi accident may boost monthly powertariff and possibly 2027 annual contract, but we think thermal power will see lowerearnings as spot+contract tariff is still falling, coupled with higher coal price with lower-than-average coal inventory. We think current 0.9-1.4x PBV is pricing in too optimisticROE for thermal IPPs, implying a flattish to modest increase in power tariffs this year. Direct powerconnection: Limited earnings boost Marketshave also turned more optimistic about the direct power connection opportunitieswith datacenter and large power users. While we agree AI poses upside risk to powerdemand, we think direct connection mainly helps new (not existing) renewables and onlyworks if power tariffs can be lower than grid connection. We see no meaningful costsavings especially in the low-tariff regions, where there are more excess green power. Upgrade CGN Power to Buyon earnings recovery potential We upgrade CGN PowerH/A from Underperform to Buy with PO HK$3.9/RMB5.0 (wasHK$3.0/RMB3.7). We are more confident about nuclear earnings recovery. Recent policyeffectively puts a floor to nuclear power tariff in two provinces in 2026, and likelybroadening to others next year. Management was more sanguine about fuel cost, citing10-15% rise over the next 5 years. Our 2027E net income is 8% above consensus withupside risk from annual contract. Risk/reward is attractive to us at 12x mid-27E PE andrelatively PE premium vs other H-share IPPs is broadly in line with average at 46%, downfrom >100% before. We also see upside risk in nuclear project approval pace. Power up with hot summer? Front-loaded peak demand boosts near-term sentimentRecent developments suggest that China’s summer power demand peak has arrived earlier than in prior years, particularly across the Southern China grid, where load hasalready exceeded 270GW in late May (vs 211GW in last May)—more than one monthahead of the typical peak window. The shift has been driven by an earlier onset of hightemperatures, alongside resilient industrial activity. For now weather forecasts are not indicating a hot summer, although El Niño may drivemore upward revision. According to weather forecasts from the European Centre forMedium-Range Weather Forecasts (ECMWF), China’s temperatures in June–July 2026 willbe lower than both 2025 levels and the 2016–25 historical average. Specifically, the Junetemperature is projected at 24.9°C, below 26.05°C in 2025 and the 25.57°C long-termaverage, while July is forecast at 26.93°C, versus 28.93°C last year and 28.08°Chistorically. This implies that weather-driven upside to summer power demand may beless pronounced than last year, potentially limiting the extent of peak-load tightness andtempering market expectations for thermal power earnings. That said, we caution thattemperature forecasts may change. On the other hand, the same forecast agency suggests average rainfall in China coulddecline -25% YoY in Jun, which historically has been a good indicator of hydro powerutilization hours with 68% correlations. This means even