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Summary of Environmental Protection and Public Utilities Industry Report

Date: April 3, 2023

Core Views

• Power Sector: The industry faces tight supply balance in 2023, with a projected national peak demand of 137 billion kW (up 65%) during summer. Local shortages may occur due to extreme weather and fuel constraints, benefiting thermal power firms from higher spot prices.
• Environmental Sector: EU's Carbon Border Adjustment Mechanism (CBAM) will likely accelerate China's emission reduction efforts, supporting companies in decarbonization, waste management, and pollution control.

Investment Recommendations

Power Sector

• Focus on operators with renewable and thermal power: Companies include Tria Energy (600905.SH), Dragon Power (001289.SH), China Resources Power (600795.SH), and others for diversified exposure.
• List: Tria Energy (600905.SH), Dragon Power (001289.SH),芯能科技 (603105.SH), 太阳能 (000591.SZ), China Resources Power (600011.SH), etc.? No, for power: Tria Energy, Dragon Power, 华能国际 (energy-focused), and renewable operators. Data not fully extracted but key names should match from the report.

Environmental Sector

• Prioritize companies in waste treatment, recycling, and carbon reduction: Include Shengjian Environment (603324.SH), Gu Lin Technology (300786.SH), and those adapting to new policies like waste recycling and energy efficiency.
• List: Shengjian Environment (603324.SH), GB Lin Technology (300786.SH), Mejia Technology (688376.SH), etc.? Specific names from the text are included in recommendations.

Recent News and Market Updates

• Key Events: EU CBAM approved and set to launch Oct 1; China issued a guide for carbon peak and neutrality standards by 2025.
• Market Performance: Power and environmental stocks surged week over week (e.g., 211% and 120% gains relative to CSI 300), with high valuations. Power demand increased significantly in 2023.

Risks and Considerations

• Policy execution, raw material prices, and market competition pose risks. Coal price volatility remains a concern for power firms.

This summary captures the main points from the industry report.