CITIC Securities: The value of energy security is highlighted; the power industry is expected to benefit from revaluation

The Iran-Iraq conflict continues to escalate, with targets expanding to energy infrastructure. According to reports from outlets such as China News Service, since the outbreak of the Iran-Iraq conflict, the Strait of Hormuz has been blocked, Qatar’s oil and gas production facilities have been attacked, and the volume of oil exports from the Middle East has decreased by approximately 61%. The tightening of oil and gas resource exports from the Middle East has driven international oil and gas prices sharply higher; Brent crude oil has already surpassed $100 per barrel, raising global concerns about energy security and supply stability.

CITIC Securities states that the Iran-Iraq conflict has exposed vulnerabilities in the energy supply chain. As electricity serves as a strategic “ballast stone” for China’s energy security, its strategic value is expected to be re-evaluated. Against the backdrop of a marginally improving policy stance and electricity price expectations having bottomed out earlier, the power sector is likely to experience a dual opportunity for fundamental and valuation recovery. It recommends nuclear power leaders expected to benefit from mechanism-based electricity price protections; hydropower leaders with high-quality underlying assets and steady dividends; coal-power integrated companies with upstream resource advantages that can effectively hedge fuel price volatility; and H-share green power and H-share thermal power companies with relatively low valuations and attractive dividends.