Under the low base effect, electricity growth rate still fell below 10%. From January to November, the total electricity consumption of the entire society increased by 11.85% year-on-year, a decrease of 0.02% from January to October. The monthly electricity consumption in November increased by 9.91% over the same period of last year, which was a decrease of 1.44 percentage points from the monthly growth rate in October. Taking into account the energy conservation and emission reduction factors, the electricity growth rate in the single month of November last year was only 3.93%. Under such a low base effect, the growth rate for the single month in November this year has broken down by 10%, indicating that the overall economic downturn is more severe.

Inflow of water improved by a year-on-year, and utilization rate of thermal power increased by 5.38%

From January to November, the cumulative average utilization of power generation equipment in the country was 4,353 hours, a year-on-year increase of 1.87%. Among them, the average utilization hours of hydropower equipment was 2,871 hours, a year-on-year decrease of 11.5%; the average utilization hours of thermal power equipment was 4,822 hours, a year-on-year increase of 5.38%. Judging from the major hydropower provinces, from January to November, the hydropower utilization hours in Hubei Province fell by 13.2% compared with the same period of last year, and the decline rate from the previous month has narrowed; the hydropower utilization hours in Sichuan Province has increased by 4.9% year-on-year; Guizhou Provinces and Yunnan provinces were down by 16.9% and 1.3% respectively year-on-year, and the water continued to deteriorate from last month.

In November alone, thermal power installed in single month fell from January to November, and the country’s newly installed capacity for electricity production was 66.27 million kilowatts, of which newly added thermal power went into 45.65 million kilowatts, hydropower went into 10.28 million kilowatts, nuclear power went into production at 1.09 million kilowatts, and wind power went into production at 8.7 million. kilowatt. In the first 11 months, the newly installed capacity of thermal power plants was basically the same as last year. In November, the number of newly-installed machines dropped significantly year-on-year.

Demand decline does not change earnings upward trend, and maintain “recommendation” rating For the power industry, due to the apparent slowdown in supply growth, the decline in demand growth will not change the trend of improvement in the supply and demand relationship in the industry in the short term. More importantly, the pressure on coal prices caused by a drop in electricity demand will significantly increase the profits of thermal power companies. The recent slight decline in Qinhuangdao coal price is supportive. At present, the PB valuation of the thermal power industry is at the historical bottom, and the 2012 PE valuation under the assumption of stable coal prices is also at the bottom of history. We believe that, driven by the rebound in profitability in 2012, the valuation level is expected to rebound significantly, maintaining the "recommended" rating of the thermal power industry. Investors are advised to focus on Huaneng Power, which has the highest performance in terms of coal price, and Shenneng, which has a significantly lower valuation. The hydropower industry has been affected by the severe water supply. This year's profit has fallen year-on-year, and the valuation has also been significantly suppressed. Under the assumption that the water will recover for many years in the next year, both the Yangtze River Power and Wuyuan Power's PE in 2012 have dropped to about 10 times, and the stock price has a higher margin of safety. Maintain the "recommended" rating of the hydropower industry.

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