2025 Q3 Utility Sector Report: Structural Differentiation & Shift to High Dividend Investment Logic

Thermal power profits rebounded significantly due to falling coal prices, with low valuation (Reddit).
Hydropower performance was stable but valuation was high; nuclear power had clear growth potential focusing on future installed capacity increments (Reddit).
New energy generation was under pressure due to market-oriented electricity price declines; water and solid waste treatment sectors saw significant cash flow improvements (Reddit).
The sector’s investment logic shifted to high dividends and stable cash flow, with dividend potential becoming a key consideration (Reddit).

Structural Differentiation: Thermal power outperformed (dividend growth 91% YoY in H1 2025), hydropower stable (Yangtze Power SH600900 Q3 net profit +0.6%), nuclear under pressure (CGN Power 01816.HK Q3 net profit -14.1%), new energy growth slowed (policy & absorption constraints).
Dividend Shift: Utility sector became core for dividend strategies (second largest in dividend index after banks), with thermal power companies like Guodian Power SH600795 committing ≥60% dividend payout for 2025-2027.
Cash Flow & Institutional Allocation: Thermal power H1 2025 operating cash flow increased by 29.4% YoY; AI infrastructure drove power demand, supporting cash flow improvement for power enterprises.

Alignment: Both Reddit and research confirmed the shift to high dividends and structural differentiation.
Impact: Low interest rates amplified the appeal of utility high dividends; AI-driven demand provided long-term support for power sectors.

Risks: Nuclear cost pressures, new energy absorption issues, regulatory changes.
Opportunities: Thermal power’s dividend growth, hydropower stability, AI-related power demand growth.

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