China General Nuclear New Energy (1811.HK) Valuation Analysis Report: Impact Assessment of Sustained Decline in New Energy Utilization Rate

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China General Nuclear New Energy Holdings Co., Ltd. (Stock Code: 1811.HK) is a listed clean energy platform under China General Nuclear Power Group, mainly engaged in wind power, solar power, gas, and coal-fired power generation businesses. According to the latest market data [0], the company’s current market capitalization is USD 1.145 billion, with a share price of USD 2.67, operating in the independent power producer industry of the utilities sector on the Hong Kong Stock Exchange.

In terms of stock price performance, China General Nuclear New Energy has risen 14.10% year-to-date (YTD) in 2025 and 11.72% over the past year, showing relatively stable performance. However, compared with the 29.53% increase of the Hang Seng Index in the same period, the company’s stock price performance is significantly lagging behind the market [0]. This relatively weak performance may be closely related to changes in industry fundamentals, especially against the background of sustained decline in new energy utilization rates, and the market’s expectations for the company’s future profitability tend to be conservative.

According to the latest data released by the National Committee of the Chinese People’s Political Consultative Conference, the national wind curtailment rate remained around 6% and the solar curtailment rate was about 5.3% in the first three quarters of 2025 [1]. Although these two figures are still at relatively controllable levels globally, they have shown an upward trend compared with previous years. The continued existence of wind and solar curtailment reflects multiple structural challenges facing the current power system:

First, the problem of mismatch between grid construction and the growth rate of new energy installed capacity is becoming increasingly prominent. A large number of new energy projects have been put into operation concentratedly, while the construction of supporting grid infrastructure and transmission channels is relatively lagging, leading to the dilemma of “electricity cannot be transmitted” in some areas. Second, the electricity marketization mechanism is not yet perfect, and price signals are difficult to effectively guide the temporal and spatial matching between new energy and electricity demand. Third, the system’s flexible resources are insufficient, and the scale of energy storage configuration is difficult to fully meet the needs of high-proportion penetration of new energy.

The International Energy Agency (IEA) pointed out in the executive summary of the “2025 World Energy Outlook” that the imbalance between power supply and demand faced by China will trigger three consequences: exacerbating grid congestion, delaying the grid connection of new power generation projects and electricity demand, and ultimately pushing up electricity prices [2]. The IEA specifically mentioned that while wind and solar curtailment and negative electricity price events in the power wholesale market occur frequently, grid projects are delayed due to slow approval, and key equipment such as transformers also face supply shortages. This structural contradiction poses a direct challenge to all renewable energy operators including China General Nuclear New Energy.

From the perspective of traditional valuation, China General Nuclear New Energy’s current valuation level is in the historical low range. The company’s price-to-earnings ratio (P/E) is only 6.47x, and the price-to-book ratio (P/B) is 0.84x [0], which is significantly lower than the average level of similar utility companies and clean energy operators. The low valuation may reflect the market’s concern about the company’s limited future profit growth, especially against the background that the decline in new energy utilization rate may lead to a reduction in power generation revenue.

According to the DCF valuation model analysis [0], the company’s intrinsic value calculated under conservative assumptions (zero revenue growth, EBITDA margin of 39.4%) is USD 237.58, which has a premium space of about 88x compared with the current stock price; the intrinsic value calculated under basic assumptions (14.1% revenue growth, EBITDA margin of 41.5%) is USD 453.62, with a more considerable premium space. However, the abnormal result of negative company value in the optimistic scenario suggests that some of the company’s financial indicators may face pressure under extreme assumptions.

The financial analysis of China General Nuclear New Energy shows that the company has risk factors in multiple dimensions [0]:

: The company adopts conservative accounting policies, and the ratio of depreciation to capital expenditure remains at a high level. Although this reserves space for future profit improvement, it also reflects that the company has relatively large asset amortization pressure, and it takes time to release the economic benefits of existing projects.

: The company’s latest disclosed free cash flow (FCE) is -USD 424 million [0], indicating that the company is still in the stage of large-scale investment expansion, with cash outflows exceeding cash inflows. For new energy operators, continuous capital expenditure investment is a necessary condition to maintain and expand installed capacity, but the negative cash flow status increases the company’s dependence on external financing.

: The company is rated as a high debt risk category [0]. Considering the characteristics of long construction cycles and slow investment recovery of new energy projects, high-leverage operation may face refinancing pressure and rising financial costs in the interest rate upward cycle.

Assume that the new energy utilization rate remains at the current level (wind curtailment 6%, solar curtailment 5.3%), the grid consumption conditions do not improve significantly, and the utilization hours of the company’s new installed capacity are lower than the design expectations. In this scenario:

• The company’s revenue growth rate may slow from the historical average of 14.1% to the range of 5-8%
• EBITDA margin may drop from 41.5% to 35-38%
• Free cash flow status is difficult to improve quickly, and capital expenditure pressure continues
• Valuation multiples may be further compressed, with P/E dropping from 6.5x to 5-6x

Assume that the wind curtailment rate rises to 8-10%, the solar curtailment rate rises to 7-8%, and the electricity price center moves down due to the advancement of electricity marketization reform:

• The company’s revenue may experience zero growth or even negative growth
• Rising debt risk may lead to an increase in financing costs by 200-300 basis points
• Financial pressure increases significantly under the high-leverage operation model
• Valuation may further drop to historical lows, and P/B may fall below 0.6x

Assume that grid construction is accelerated, energy storage supporting facilities are kept up, and policy optimization promotes new energy consumption:

• The company’s power generation utilization hours rebound, and revenue growth accelerates
• Free cash flow status improves, and dividend payment capacity is enhanced
• Market sentiment warms up, and valuation repairs to the industry average level
• P/E may repair to the range of 8-10x

Based on the above analysis, China General Nuclear New Energy’s current low valuation (PE 6.47x, PB 0.84x) not only reflects the market’s concern about the company’s short-term operational pressure but also includes a reserved attitude towards its long-term development potential. The negative impact of the sustained decline in new energy utilization rate has been reflected in the current stock price to a considerable extent. However, if the downward trend of utilization rate continues or the financial situation deteriorates beyond expectations, the valuation may come under further pressure.

From the perspective of value investment, the company’s 0.84x PB means that the stock price is below the book value. If the company can effectively control capital expenditure, improve cash flow, and enhance asset operation efficiency, there is room for valuation repair. But this premise is the stabilization and recovery of new energy utilization rate and the effective control of the company’s debt risk.

: The decline in new energy utilization rate is a common challenge faced by the entire industry. External factors such as policy adjustments, grid construction progress, and changes in energy storage costs may all affect the company’s performance.

: Policy changes such as renewable energy subsidy policies, electricity price formation mechanism reforms, and electricity marketization advancement may have a significant impact on the company’s profit model.

: High debt burden and negative free cash flow mean that the company may face liquidity pressure in the economic downturn or interest rate upward cycle.

: The continuous rapid growth of new energy installed capacity and intensified industry competition may lead to lower electricity prices and reduced utilization hours.

Investors should focus on the changing trends of the following indicators: First, the changes in power generation and utilization hours disclosed by the company every quarter; Second, the trend of wind and solar curtailment rates; Third, the improvement of free cash flow and debt structure; Fourth, the progress of the company’s new project acquisition and commissioning; Fifth, positive or negative news at the policy level.

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[0] Jinling API Financial Database - China General Nuclear New Energy (1811.HK) Market Data and Financial Analysis

[1] National Committee of the Chinese People’s Political Consultative Conference - “Deeply Practice the New Strategy of Energy Security and Strive to Compose a New Chapter in Building an Energy Power” (http://www.cppcc.gov.cn/zxww/2025/12/22/ARTI1766384316444247.shtml)

[2] International Energy Agency (IEA) - “2025 World Energy Outlook” Executive Summary (https://iea.blob.core.windows.net/assets/bb992cac-2515-490d-ae02-c83bf634c9cc/WEO2025_Executivesummary_Chinese.pdf)