2Q/1H26 preview: Challenging earnings for most

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2Q/1H26 preview: Challenging earnings for most

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Utilities - HK/China (H/A)

2Q/1H26 preview: Challenging earnings for

most

Price Objective Change

In the upcoming 2Q/1H26 utilities results, we expect most IPPs to miss expectations on 13 July 2026

tariff pressure and cost increase especially coal, along with feeble 1H26 results for gas Equity

distributors, searching for stronger dividend commitment. We expect the wind supply HK/China

chain and yield sector to perform better in results with potential beat in CKI interim DPS. Utilities

We continue to favor nuclear & hydro over thermal power, wind supply chain over solar

and like CKI over PAH. See details inside for earnings & PO changes. Gary Tsang >>

Research Analyst

IPP: Most likely miss 2Q/1H expectations Merrill+852 3508Lynch6825(Hong Kong)

We expect most IPP to report falling YoY earnings due to lower tariff, higher coal cost, gary.tsang@bofa.com

and lower wind/solar utilization. We expect Huaneng and Huadian Power 2Q net Charlotte Xia >>

income to fall 40-50% YoY on 8% YoY rise in unit fuel cost. CR Power 1H net income Merrill Lynch (Hong Kong)

could fall 30% YoY as focus shifts to any updated capex/dividend guidance post its charlotte.xia@bofa.com

renewables IPO. Longyuan 2Q net income will likely fall -25% YoY but its PB valuation Cissy Guan >>

is already below trough 0.5x. Yangtze Power 2Q power output grew only 2% YoY and Merrill Lynch (Hong Kong)

hence we expect tepid earnings growth at +3%. CGN Power flattish 2Q YoY net income cissy.guan@bofa.com

is better positioned (still a miss), in our view, on normalizing maintenance days.

Sell-off in wind gives better entry opportunity Exhibit 1: PO changes

Recent withdrawals from past European offshore wind auctions and rising trade PO summary