Daily Investment Strategy

Daily focus：CR Power（836）

With the emergence of DeepSeek, some market participants anticipate that China's electricity demand will rise strongly due to AI consumption, expecting Chinese power stocks to experience a surge similar to U.S. stocks like NuScale. According to estimates by the State Grid Energy Research Institute, China's data center industry will see its electricity demand double by 2030 to 400 TWh. However, compared to the country's total electricity consumption of around 10,000 TWh, data centers' energy demand remains relatively small. While speculative interest in Chinese power stocks is possible, we prefer to focus on the fundamental value of individual stocks when evaluating investment potential.               In 2024, CR Power demonstrated resilience. The group achieved a 7.4% year-over-year increase in electricity sales, totaling 208 million MWh. Its wind and solar energy grew by 10.5% and 141.5%, respectively. In the first half of 2024, CR power's wind farms operated for 1,223 hours, exceeding the national average by 89 hours, and its solar plants operated for 705 hours, surpassing the national average by 79 hours. Its coal plants also outperformed the national average by 50 hours. These figures reflect the group's overall efficiency being higher than those of its peers.               Power stocks have underperformed the general market since mid-2023, primarily due to concerns about significant electricity price cuts in China, especially in Guangdong. However, the price uncertainty has been cleared, which is positive for investors. Additionally, the recent decline in coal prices due to increasing inventories will partly offset the 2025 electricity price cut. China Resources Power's projected dividend yield is above 7%, with a P/E ratio below its historical average, offering attractive investment potential. Target price is HK$20.5.

S&P 500 falls as Nvidia stumbles, and tariff concerns continue

The S&P 500 closed lower on Thursday, influenced by the threat of new tariffs and Nvidia's stock price decline. Concerns about the chipmaker's profit margins overshadowed the fact that its quarterly performance and guidance exceeded Wall Street expectations. President Trump stated that his proposed 25% tariffs on Canadian and Mexican goods would take effect on March 4 as scheduled, citing the reason that drugs are still entering the U.S. from these countries. In a post on his Truth Social platform, Trump also added that China would face an additional 10% surcharge on March 4, adding to the 10% tariff imposed on February 4. In terms of economic data, the second reading of the fourth-quarter GDP showed the economy grew by 2.3%, unchanged from the first reading. However, on the labor market front, the number of jobless claims rose to 242,000 for the week ending February 22, exceeding expectations of 222,000.

Hong Kong Stock Connect had a net inflow of HK$16.8bn Thursday of which Alibaba (9988) had the largest net inflow, reaching HK$3.39bn; followed by Tracker Fund (2800). CNOOC (883) recorded the largest net outflow at $0.18bn, followed by XPeng (9868).