Morgan Stanley released a research report saying that after Jiangsu Province announced an overall drop in electricity prices next year, Guangdong Province also announced the 2025 electricity market transaction results. The average electricity price was reduced by 7.4 cents per megawatt-hour, down 16% from the previous year, slightly lower than market expectations. It is expected that the profitability of coal power companies will become more vulnerable.
The bank also said that the reduction in nuclear power prices in Guangdong Province was limited in 2025, with market electricity prices falling by only 4 cents. Considering that the basic market transaction volume only accounts for about 30% of nuclear power transactions, it is believed that the current electricity price reduction will only have a negative impact of about 4% to 5% on CGN Power (01816) profits. It is expected that the company will be able to offset the relevant impact by reducing auxiliary service expenses and financing costs next year. Damo rated CGN Power as an “increase in holdings”, with a target price of HK$3.69.
