Everbright Securities: The official commencement of construction of the Yajiang Hydropower Station is expected to release rich orders for construction projects and materials

The Zhitong Finance App learned that Everbright Securities released a research report saying that recently, the hydropower project in the lower reaches of the Brahmaputra River announced the official commencement of the project. Considering the progress of China's water conservancy engineering technology in recent years, assuming that the hydropower project in the lower reaches of the Brahmaputra River has a construction cycle of 15-20 years, the annual investment amount is expected to be 60-80 billion yuan. Judging from the investment structure of hydropower projects, permanent construction projects account for about 32% to 45%; mechanical and electrical equipment purchase and installation costs account for 18% to 25%; temporary project investment accounts for 15% to 20%; and reservoir immigration fees and compensation for reservoir flooding losses and other expenses account for a total of about 10% to 35%. Under hierarchical development, the construction of a hydropower station in the lower reaches of the Brahmaputra River is expected to bring in rich orders for construction projects, construction materials and equipment for a long time to come.

The main views of Everbright Securities are as follows:

The lower reaches of the Brahmaputra River hydropower plant officially started, with a total investment of about 1.2 trillion yuan

Tibet's water energy resources are mainly concentrated in the main streams of the Brahmaputra River, the Nu River, the Lancang River, and the Jinsha River. Among them, the main stream of the Brahmaputra River basin is the richest in hydroenergy resources, with a theoretical reserve of nearly 80 million kilowatts. The hydropower project in the lower reaches of the Brahmaputra River is located in Linzhi City, Tibet Autonomous Region. It mainly uses the development method of cutting and straightening and tunneling to build 5 cascade power plants. Cascade development can flow the waste water from the first level of power generation from the cascade reservoir to the next level to generate electricity again. A stream of water is converted into electricity several times, and power generation efficiency can be improved through effective coordination and connection.

The total investment of hydropower projects in the lower reaches of the Brahmaputra River is about 1.2 trillion yuan. According to the “2023 China Renewable Energy Project Cost Management Report” issued by the General Hydropower Planning and Construction Institute, the average cost of hydropower projects approved in 2023 is 20,344 yuan/kW. Based on this, it is estimated that the installed capacity of hydropower projects in the lower reaches of the Brahmaputra River is estimated to be 60 million kilowatts.

The total investment is about 6 times that of the Three Gorges, which is expected to bring in rich orders for construction projects and materials

Currently, the world's largest water conservancy hub project is the Three Gorges Project. According to data announced by the National Audit Office, the total investment amount of the Three Gorges Project is 207.2 billion yuan. The Three Gorges Project was built in three phases and officially started on December 14, 1994; the main dam project was completed on May 20, 2006, and the last hydroelectric power unit was put into operation on July 4, 2012.

The total investment amount for hydropower projects in the lower reaches of the Brahmaputra River is about 6 times that of the Three Gorges Project. Considering the progress of water conservancy engineering technology in recent years, assuming that the hydropower project in the lower reaches of the Brahmaputra River has a construction cycle of 15-20 years, the annual investment amount is estimated to be 60-80 billion yuan. Judging from the investment structure of hydropower projects, permanent construction projects account for about 32% to 45%; mechanical and electrical equipment purchase and installation costs account for 18% to 25%; temporary project investment accounts for 15% to 20%; and reservoir immigration fees and compensation for reservoir flooding losses and other expenses account for a total of about 10% to 35%. Under hierarchical development, the construction of a hydropower station in the lower reaches of the Brahmaputra River is expected to bring in rich orders for construction projects, construction materials and equipment for a long time to come.

Major projects have started one after another, which will effectively drive the growth rate of infrastructure investment

In the first half of '25, construction of China's “dual” projects began and progressed steadily. Infrastructure investment increased 4.6% year-on-year in the first half of the year. The growth rate was 1.8 percentage points higher than total investment, driving the total investment to increase by 1.0 percentage point. In the next stage, China will further advance “dual” construction and “two new” tasks. At the press conference of the State Information Office on July 9, '25, the National Development and Reform Commission also stated that the 102 major projects of the “14th Five-Year Plan” have achieved a series of significant progress and significant results, and it is expected that all of the planned goals will be completed before the end of the year. Hydropower development in the lower reaches of the Brahmaputra River is a major “14th Five-Year Plan” project in China. Construction capital is guaranteed, and the gradual progress of the project will also effectively drive the growth rate of infrastructure investment in China.

Aspect of the target

The official commencement of construction of the Yajiang Hydropower Station is expected to bring in rich orders. It is recommended to focus on China Power Construction (601669.SH) (hydropower construction), China Energy Construction (601868.SH) (hydropower construction), Gaozheng Civilian Explosion (002827.SZ) (Tibet Civilian Explosion Enterprise), Tibet Tianlu (600326.SH) (Tibet cement faucet), Huaxin Cement () (domestic tunnel boring machine), etc. 600801.SH 688425.SH

risk analysis

The construction of the project fell short of expectations, and funding fell short of expectations.