Power Sector Shares Extend Declines as Rising Coal Prices Pressure Thermal Generators' Q2 Profits

Stock News06-24

Shares of power companies in Hong Kong continued their downward trajectory.

At the time of writing, HUANENG POWER (00902) was down 4.71%, trading at HK$5.76. HUADIAN POWER (01071) fell 3.19% to HK$3.95, while CHINA LONGYUAN (00916) declined by 2.64% to HK$5.17.

The backdrop for this movement includes data from the National Bureau of Statistics showing national thermal power generation in April and May 2026 increased by 3.1% and 2.1% year-on-year, respectively.

Factoring in a one-month inventory period, the average settlement price for Qinhuangdao thermal coal in the second quarter of 2026 was 781 yuan per ton. This represents a year-on-year increase of 19.5% and a sequential quarterly rise of 9.6%.

Analysts at Huatai Securities noted that considering the year-on-year and sequential increases in coal prices, and combined with the decline in long-term contract electricity prices across various regions in 2026, the net profit attributable to shareholders of major thermal power companies for the second quarter is likely to face downward pressure compared to the same period last year.

Meanwhile, analysts from Guojin Securities expressed a different view, stating that looking ahead to the second quarter, the market is overly concerned about rising coal prices while underestimating the profit-correction potential brought by increases in monthly spot electricity prices.

They believe the thermal power sector is approaching a fundamental bottom and poised for a rebound, highlighting the potential for value re-rating driven by enhanced profit stability and increased dividend payouts.

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