Guangfa Securities: low expectations + low valuation + high dividend yield, power sector has both offensive and defensive capabilities.

Guangfa Securities research report indicates that the outstanding performance of thermal power and the expected impairment in the annual report have been anticipated. The first quarter report will be an important influencing factor in the power sector market. The reassessment of the market continues, and multidimensional improvements are underway: in terms of electricity prices, the anticipated reduction in long-term contracts in various regions has already been fully anticipated. In terms of supply and demand, the decrease in supply growth and the continuous over-performance of AI demand are expected to improve the electricity supply and demand structure. The acceleration of electricity system reform, the expansion of spot trading, capacity electricity prices, and auxiliary services are expected to improve comprehensive electricity prices. In terms of cash flow, investment decline, improvement in free cash flow, and increased dividend expectations. Performance is expected to exceed expectations, valuation is low, public mutual fund holdings are at a decade low, and the sector is both offensive and defensive.