Deutsche Bank: Yangtze Power’s third-quarter generation and profit decline; dividend-yield spread supports defensive appeal

Why did profit decline in the third quarter?

In the third quarter of 2026, power generation fell 15% year on year. Deutsche Bank attributed this to weaker water inflows and a high base in the same period a year earlier, and considered these the main reasons for the decline in profit.
Third-quarter revenue fell 13.5% year on year to 25.1 billion yuan, while gross profit declined 18.6% to 16.7 billion yuan. Financial expenses fell 15.2% year on year to 1.95 billion yuan, partly easing pressure on profitability.

Net profit attributable to the parent company in the third quarter was 11.6 billion yuan, down 23% year on year. Excluding a one-off fair-value loss of about 600 million yuan, core profit was 12.1 billion yuan, down 20% year on year and in line with Deutsche Bank’s forecast.
Fair-value changes also widened the decline in reported profit: the company recorded a loss of 598 million yuan in the quarter, compared with a gain of 153 million yuan in the same period a year earlier.

Total power generation in the first nine months fell 4.3% year on year to 225.1 billion kilowatt-hours; revenue declined 4.1% to 63.1 billion yuan, and net profit attributable to the parent company fell 6.6% to 26.3 billion yuan. Financial expenses declined from 7.2 billion yuan in the same period a year earlier to 6.1 billion yuan.
Deutsche Bank expects a dividend yield of 3.4% in 2026, about 180 basis points above the China ten-year government bond yield cited in the report, and also above the average spread over the past five years by 120 basis points. The bank believes this spread supports the stock’s defensive appeal, maintains its Buy rating, and sets a 36 yuan target price for the next 12 months.