Huaneng Lancang River Hydropower Inc. and the Green Energy Surge

As the summer peak electricity demand approaches, the demand for green energy is expected to receive a stronger boost. This trend is reflected in the performance of the Green Power ETF (159625), which is on the verge of a fourth consecutive day of gains. On May 9, 2025, the National Green Power Index rose by 0.49%, with key component stocks such as Jingyuntong, Jiaze New Energy, Shen Energy, Datang Power, and Fugang Power experiencing significant increases. The Green Power ETF itself rose by 0.44%, with a notable increase in both trading volume and net asset value over the past two weeks.

Market Dynamics and Investment Opportunities

The Green Power ETF has seen a substantial inflow of funds, with a net increase of 2,264.70 million yuan over the past 19 trading days. The ETF’s tracking index, the National Green Power Index, has a trailing P/E ratio of 18.55, placing it in the lower 13.64% of its three-year valuation range, indicating a historically low valuation.

The top ten weighted stocks in the National Green Power Index include Longjiang Power, China Nuclear Power, Three Gorges Energy, State Power Investment, Sichuan Investment, China General Nuclear, Huaneng International, Huaneng Hydropower, State Power, and Shen Energy, collectively accounting for 58.04% of the index.

Renewable Energy Growth

The first quarter of 2025 saw China’s wind and solar installations reach a record 148.2 billion kilowatts, surpassing traditional thermal power installations for the first time. This surge in renewable energy installations is driven by the traditional peak season for the power industry and an accelerated energy revolution.

Policy and Market Outlook

According to Galaxy Securities, the government’s 2025 work report maintains a firm stance on “green transformation.” The focus on the power industry suggests that supply pressure may ease compared to previous years, with policies likely emphasizing green energy, further catalyzing demand.

Investors can tap into these opportunities through the corresponding Green Power ETF linked fund (017057).

Shanghai Stock Exchange and Market Resilience

Meanwhile, the Shanghai Stock Exchange has shown resilience, with the SSE 300 ETF (159919) attracting over 54 billion yuan in net inflows over the past 19 days. Despite a slight decline in the SSE 300 Index, the ETF has seen significant growth in both scale and share, with a market capitalization reaching 168.93 billion yuan.

The SSE 300 Index, which the ETF tracks, is valued at a historical low, with a trailing P/E ratio of 1.35, indicating strong value. The top ten weighted stocks in the index include Guizhou Maotai, Neusoft, China Pacific Insurance, China Merchants Bank, Longjiang Power, Midea Group, BYD, CCB, Zijin Mining, and East Money, collectively accounting for 22.85% of the index.

Global Context and Investment Strategy

Goldman Sachs reports that the Chinese stock market remains resilient due to a weak dollar, strong economic growth, and domestic policy support. The bank maintains a “buy” rating on Chinese stocks, raising its earnings per share forecast for 2025 and adjusting its target prices for the MSCI China Index and SSE 300 Index upwards, suggesting potential returns of 7% and 15%, respectively.

Investors without stock accounts can consider the SSE 300 ETF linked fund (160724) for low-cost access to core A-share assets.

Huaneng Lancang River Hydropower Inc. Overview

Huaneng Lancang River Hydropower Inc., listed on the Shanghai Stock Exchange, specializes in hydropower generation services. As of May 7, 2025, the company’s stock closed at 9.62 CNY, with a market capitalization of 171.54 billion CNY. The company’s P/E ratio stands at 19.82, reflecting its valuation in the utilities sector.

Longjiang Power’s Performance

Longjiang Power, a significant player in the hydropower sector, reported a robust performance in 2024, with a 19.28% increase in net profit and an 18.17% rise in net profit excluding non-recurring items. The company’s growth was driven by increased power generation and optimized electricity prices, alongside a reduction in financial expenses and improved asset-liability management.

Longjiang Power controls approximately 16.45% of China’s hydropower capacity, making it a key player in the “Six Reservoirs Coordination” initiative, which enhances power generation efficiency and ecological benefits through coordinated operation of major hydropower stations along the Yangtze River.

As the energy landscape evolves, Huaneng Lancang River Hydropower Inc. and its peers are well-positioned to capitalize on the growing demand for renewable energy, supported by favorable policies and market dynamics.