Huatai Securities | Utilities & Environmental Protection: 3Q26 Earnings Preview — Thermal Power Under Near-Term Pressure, High Gas Prices Favor Gas Resources
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Huatai Securities previews 3Q26 results for China's utilities and environmental sector and maintains an Overweight stance. Thermal power faces near-term pressure on attributable net profit as annual long-term contract power prices declined, thermal generation fell year on year in July-August, and coal prices rose. Hydropower output increased year on year, though inflows diverged across basins, while nuclear generation grew steadily; some nuclear operators still face earnings pressure from lower market-based power prices. Renewables earnings are squeezed by severe curtailment, with wind and solar generation growth lagging installed capacity growth. Gas players benefit from high gas prices — ENN Natural Resources is expected to fare relatively well on purchase-sale spreads and hedging. Environmental companies should see earnings and cash flow improve as waste-to-energy projects expand overseas, where project IRRs run significantly above domestic levels, helped by domestic debt-resolution policies. Into 4Q26, Huatai watches coal prices, inventories and long-term coal contract shares for thermal; hydro inflows; power prices and curtailment inflection for renewables; weather-driven heating demand for gas; and receivables plus overseas waste-to-energy progress for environmental names. The report also lists median, low and high 3Q26 net profit forecasts for major companies.