JPMorgan's Downgrade: JPMorgan has downgraded CHINA RES POWER from Overweight to Neutral and reduced its target price, while maintaining an Underweight rating for HUANENG POWER with a lower target price.

Impact of Price Floor Removal: The removal of the electricity price floor is expected to lead to further declines in on-grid electricity prices for thermal power, potentially compressing profit margins for these companies.

Uncertainty in Tariff Mechanism: Despite the Chinese government's mention of improving the capacity tariff mechanism, there is significant uncertainty regarding its effectiveness and implementation timing.

Negative Earnings Outlook: The earnings outlook for thermal power plants is unfavorable, with market forecasts and dividend predictions facing downside risks.

Challenges in China's Power Industry: HSBC Research indicates that China's power industry will experience weakened growth momentum in the first year of the 15th Five-Year Plan due to declining electricity prices, a slowdown in new installations, and a stabilizing policy environment.

Downgrades and Ratings: HSBC has downgraded HUANENG POWER from Hold to Underweight and CHINA RES POWER from Buy to Hold, reflecting concerns over their earnings forecasts.

Optimism for CHINA LONGYUAN: The report expresses optimism for CHINA LONGYUAN, anticipating that its earnings growth will lead the industry, driven by strong performance in wind resources.

Attractive Dividend Yields: CHINA POWER is projected to have a 5.8% dividend yield in FY26, while CHINA YANGTZE POWER is expected to yield about 3.7%, making them attractive options among their peers.

Citi Research Downgrade: Citi Research downgraded HUANENG POWER's H-/A-shares from Buy to Sell, reducing target prices from $7.2/RMB10 to $4.5/RMB6.25.

Profit Expectations: The broker anticipates that HUANENG POWER's net profit will peak in 2025 and decline in 2026-2027 due to significant tariff reductions and limited decreases in unit coal costs.

Return on Equity: The expected return on equity for 2025 is projected at 9.8%, the highest since 2015, but the company may encounter downside risks.

Short Selling Data: As of January 16, 2026, short selling amounted to $34.66 million with a ratio of 11.524%.

Citi's Research Report: Citi has added HUANENG POWER (00902.HK) to its 30-day downside catalyst watchlist due to anticipated declines in market base electricity prices for 2026, which are expected to fall below market expectations.

Electricity Sales and Tariffs: The report indicates that 63.5% of HUANENG POWER's electricity sales in 1-3Q25 are from Guangdong, Zhejiang, and Jiangsu, where the average market base tariff is projected to decrease by 13.4% YoY in 2026.

Coal Power Capacity Growth: China's coal power plants are expected to see a 65% YoY increase in electricity production capacity, leading to an estimated 8.9% YoY drop in HUANENG POWER's average coal electricity tariff in 2026.

Target Price and Rating: HUANENG POWER has been assigned a target price of HKD7.2 and a Buy rating by Citi, despite the challenges posed by declining tariffs and increased production capacity.

Electricity Tariffs and Project Insights: By the end of 2025, electricity tariffs bidding results for 25 provinces in China were released, indicating that high-quality regional projects remain profitable despite a smaller release scale, with current policies favoring wind power growth.

Focus on Industry Leaders: CICC recommends focusing on industry leaders with significant wind power portfolios and strong operational capabilities, as they are likely to benefit from the supportive policies.

Project Distribution Statistics: The five major power centralized photovoltaic and wind power projects accounted for 19% and 22% of incremental projects, respectively, with HUANENG POWER, State Power Investment Corporation, and DATANG RENEW leading in resource acquisition.

Impact of Development Strategies: The development focus may shift towards new energy large bases, while the ranking of new installations for conventional projects could be affected by the "15th Five-Year Plan" and the release of resources in advantageous regions.