According to the Jintongcaijing APP, China International Capital Corporation released a research report stating that the recent adjustment of the power operation sector has released short-term performance risks, improved the crowded track, and investment value of some targets has reappeared. The company looks forward to the frequent introduction of electric carbon policies to improve the enthusiasm for demand-side consumption of green electricity and help realize the value of green environment. The bottom of the photovoltaic market was obvious in July. With the growth of overseas inverter orders and the improvement of component production in August and September, which is expected to rebound. Among them, it is recommended to pay attention to the silicon materials sector, which has bottomed out in price and is expected to see price recovery due to subsequent production capacity improvement.

Power operation: The sector has recently adjusted to release short-term performance risks, improve the crowded track, and some targets have reappeared investment value. China International Capital Corporation statistically showed the decline in stock prices since June. Hong Kong's green electricity and thermal power leaders fell by 10-30%, nuclear power by 10-12%, and hydropower relatively resisted the drop. Looking forward to August, China International Capital Corporation recommends: 1) Green electricity / thermal power: China International Capital Corporation looks forward to the frequent introduction of electric carbon policies to improve the enthusiasm for demand-side consumption of green electricity and help realize the value of green environment. The company is bullish on the performance improvement of thermal power after experiencing the low point of 2Q24. It is recommended to focus on China Power H, Huaneng Power International H, and Fujian Funeng (not covered). 2) Nuclear power: The performance of quantity, price, and cost is stable. China International Capital Corporation still bullish on the certainty of the track and recommends configuration after the callback. 3) H-share utilities: The transaction of interest rate cuts is "ahead of the curve," improving the valuation of class bond targets from the denominator end. It is recommended to pay attention to electric power assets (not covered) and CKI Holdings (not covered).

Wind power: China International Capital Corporation is optimistic about the two directions of domestic offshore wind power and overseas export. The new construction of domestic offshore wind power in 2024 is still slightly slow. China International Capital Corporation has lowered its forecast for the entire year's newly added offshore wind power to 8GW. However, industry bidding continues to be strong, and the company expects the industry to start anew from 2H24. The overseas export direction continues to land orders, and in early July, Orient Cable and Mingyang Intelligent respectively won large orders for European offshore wind projects, continuing to verify the trend of overseas exports. China International Capital Corporation recommends: 1) Orient Cable in the cable sector, which benefits from both domestic offshore wind power and overseas exports; 2) Large-scale energy and silicon particles, which have a clear advantage in offshore wind products and benefit more from the high-growth structural offshore wind turbine basic sector of Dajin Heavy Industry.

Photovoltaics: The market hit bottom significantly in July, with a rebound in overseas inverter orders and component production expected to improve in August and September as upstream prices stabilize, offering a chance for a rebound. The P/B valuation of the industrial chain has reached the bottom of the 2012/2018 cycle, and most parts have basically lost money and are in a negative cash state. In the main sector, China International Capital Corporation believes that the bottoming of silicon material silicon wafer prices is expected to drive downstream battery component prices to stabilize. With the end of the European holiday and the arrival of the domestic installation peak season, component production in August and September is expected to recover, and the supply and demand situation in 4Q may improve. In the main production sector, attention should be paid to the silicon material sector, which has seen the bottom, and the subsequent increase in production capacity brings about price recovery. For auxiliary materials, the profit of glass and film is still in the bottom exploration stage. The overhaul tide of glass production capacity has appeared, and China International Capital Corporation pays attention to the supply improvement brought by the clearance of production capacity; inverter benefits from the opportunity of overseas household orders beyond expectations in Asia, Africa, and Latin America. It recommends Ginlong Technologies, Sungrow Power Supply, and Jiangsu Tongrun Equipment Technology (not covered). In other areas, it is recommended to pay attention to the Zhejiang Chint Electrics, which has the potential for recovery of low-voltage electrical appliances.

Valuation and Recommendations

Maintain the profit forecast, rating, and target price of relevant companies unchanged.

Risk

The macroeconomic downturn, fluctuations in raw material prices, policies falling short of expectations, and downstream demand falling short of expectations.