Comparative Analysis of Investment Value Between Thermal Power Stocks and Bank Stocks

1. Industry Performance and Financial Data Comparison
   
   In terms of bank stocks, China Merchants Bank rose a cumulative 16.36% from 2020 to 2025, with a price-to-book ratio of 0.82, ROE of 12.09%, and a dividend yield of about 5% in 2023. Dividends are stable, but long-term returns are low [0]. For thermal power stocks, Huaneng International rose 21.65% from 2024 to 2025, with a price-to-book ratio of 0.85, ROE of 10.25%, and a dividend yield of about 3.4% in 2024, with an increased dividend ratio [0][1].

2. Industry Outlook and Policy Impact
   
   The banking industry has stable asset quality with a non-performing loan ratio of about 1.5%, but net interest margins continue to narrow, putting pressure on profitability [5]. The thermal power industry is in a performance recovery period, with tight balance between power supply and demand. The capacity electricity price policy provides a stable income source for enterprises, and thermal power plays a “ballast stone” role in the new power system [4][1].

3. Hidden Assets and Valuation Models
   
   Huaneng International has high R&D investment in environmental protection and carbon capture technology, with potential value, but hidden assets such as land reserves have not been clearly verified [2]. DCF valuation shows that China Merchants Bank has a 166.1% upside in fair value compared to the current price in the base scenario, while Huaneng International has a 4142.0% upside. However, it should be noted that the latter’s valuation is highly sensitive to future growth assumptions due to extremely low historical profit margins, so it needs to be treated with caution [0].

1. Thermal Power Stocks Show Valuation Cost-Effectiveness
   : Thermal power stocks have similar price-to-book ratios to bank stocks, but thermal power stocks benefit from policy support and performance recovery, with higher growth potential.
2. Long-Term Growth of Bank Stocks Is Constrained
   : Narrowing net interest margins have become a major bottleneck for the long-term growth of the banking industry, affecting its profit prospects.
3. Huaneng International’s Valuation Needs Cautious Interpretation
   : Its DCF valuation result is abnormally high, mainly due to the low historical profit base, so it needs to be verified with other valuation methods.

• Risks
  : The thermal power industry is greatly affected by coal prices and electricity price policies; Huaneng International’s DCF valuation is extremely sensitive, and the value of hidden assets has not been fully verified [0][1][2].
• Opportunities
  : The performance recovery trend of the thermal power industry is clear; the capacity electricity price policy provides stable income for thermal power enterprises; Huaneng International’s environmental protection technology investment may bring long-term value [1][4].

Overall, bank stocks have stable dividends but limited long-term growth, while thermal power stocks are in a performance recovery period with clear policy support. The two have similar valuation levels, but thermal power stocks have greater growth potential. Investors need to pay attention to the policy and cost risks of the thermal power industry, as well as the limitations of Huaneng International’s valuation model, and make decisions based on their own risk preferences and investment cycles.