Stock Analysis & Valuation SDIC Power Holdings Co., Ltd. (600886.SS)

• Previous Close: $12.75
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	12.73	0
Intrinsic value (DCF)	8.31	-35
Graham-Dodd Method		n/a
Graham Formula	8.95	-30

Strategic Investment Analysis

Company Overview

SDIC Power Holdings Co., Ltd. (600886.SS) is a major Chinese state-owned power generation company headquartered in Beijing, operating as a key subsidiary of State Development & Investment Corp. (SDIC). The company engages in diversified electricity generation across China with a substantial installed capacity of 36.218 million kilowatts, comprising 20.765 million kW hydropower, 11.8808 million kW thermal power, 2.2305 million kW wind power, and 1.342 million kW solar power. As China accelerates its energy transition toward carbon neutrality, SDIC Power represents a strategic blend of traditional and renewable energy assets, positioning it as a critical player in the nation's power infrastructure. The company's diversified generation portfolio provides operational stability while aligning with national clean energy goals, making it a significant contributor to China's renewable utilities sector and energy security framework.

Investment Summary

SDIC Power presents a conservative investment profile with low beta (0.11) characteristic of utility stocks, offering defensive characteristics in volatile markets. The company generated CNY 57.8 billion in revenue and CNY 6.64 billion net income with a dividend yield supported by a CNY 0.4565 per share payout. However, high total debt of CNY 156.3 billion against cash of CNY 10.2 billion raises leverage concerns, though this is partially offset by strong operating cash flow of CNY 24.7 billion. The capital expenditure of CNY -21.8 billion indicates significant ongoing investment, likely in renewable expansion aligned with national priorities. The investment case hinges on China's energy transition policy support, stable cash flows from diversified generation assets, and state ownership providing implicit backing, balanced against sector regulatory risks and substantial debt load.

Competitive Analysis

SDIC Power's competitive positioning is defined by its state-owned enterprise status, diversified generation portfolio, and scale as one of China's major power producers. The company's competitive advantage stems from its parent company's (SDIC) strong government connections, which facilitate project approvals and policy alignment. Its generation mix combining stable thermal power with growing renewable assets provides revenue stability while positioning for energy transition benefits. The 36.2 GW installed capacity represents significant scale economies in operations and maintenance. However, the company faces intensifying competition from pure-play renewable developers and other state-owned power giants. Its thermal power assets, while providing base-load stability, face long-term transition risks as China decarbonizes. The company's competitive positioning is strengthened by its hydropower assets, which offer low-cost, flexible generation, but its renewable portfolio (wind and solar) is relatively modest compared to specialized competitors. SDIC Power's state backing provides advantages in financing and project development but may also impose social obligations that could impact commercial flexibility.

Major Competitors

• China Resources Power Holdings Co., Ltd. (0836.HK): China Resources Power is one of China's largest independent power producers with significant thermal and growing renewable capacity. Its strengths include strong financial resources, diversified asset portfolio, and extensive operational experience. However, it faces similar transition challenges as SDIC Power with substantial coal-fired assets. Compared to SDIC Power, CR Power has been more aggressive in renewable expansion but lacks SDIC's direct state development corporation backing.
• Huaneng Power International, Inc. (0902.HK): As China's largest power producer, Huaneng possesses massive scale and nationwide presence. Its strengths include dominant market position, extensive generation portfolio, and strong operational capabilities. Weaknesses include heavy reliance on coal-fired generation and significant decarbonization challenges. Huaneng's scale exceeds SDIC Power's, but SDIC benefits from a more balanced renewable mix and stronger hydropower presence.
• China Longyuan Power Group Corporation Limited (0916.HK): China Longyuan is Asia's largest wind power producer with focused renewable expertise. Its strengths include specialized wind development capabilities, growing project pipeline, and pure-play renewable status attracting ESG investors. Weaknesses include reliance on wind resource availability and grid curtailment risks. Compared to SDIC Power's diversified approach, Longyuan offers pure renewable exposure but lacks thermal power stability.
• China Huaneng Group Co., Ltd. (600011.SS): The parent company of Huaneng Power International, China Huaneng Group is one of China's Big Five power generators with comprehensive energy assets. Strengths include enormous scale, integrated operations, and strong government relationships. Weaknesses include carbon transition challenges and operational complexity. As a direct peer to SDIC Power, Huaneng Group competes across all generation segments with greater scale but similar state-owned characteristics.
• China State Power Investment Corporation Limited (600795.SS): SPIC is another major state-owned power company with significant nuclear, renewable, and thermal assets. Its strengths include nuclear power expertise, growing renewable portfolio, and technological capabilities. Weaknesses include complex corporate structure and transition challenges. SPIC competes directly with SDIC Power across generation segments, with both benefiting from state ownership but pursuing slightly different technology emphasis.
• China Three Gorges Renewables Group Co., Ltd. (600905.SS): As the renewable arm of China Three Gorges Corporation, this company specializes in hydro, wind, and solar development. Strengths include massive hydropower resources, renewable expertise, and strong financial backing. Weaknesses include geographic concentration and project development risks. Compared to SDIC Power, Three Gorges Renewables offers more focused renewable exposure but lacks thermal power balancing capabilities.