40% of the equity stake of Guodian Nanjing Automation Co., Ltd. has been transferred free of charge. China Huadian has quickly raised the management level of two listed companies, and behind these successive moves lies the fact that the surging new energy sector has hit a profit red light.
Huadian has upgraded two listed platforms within two months, and the improvement of management efficiency cannot conceal the profit decline of its new energy business.
Insight Energy learned that on the evening of September 11, Guodian Nanjing Automation released an announcement, stating that its controlling shareholder Nanjing Automation General Factory plans to transfer 40% of its shares (about 406 million shares) to China Huadian free of charge, lifting the company's property right level from the third tier to the second tier. Less than two months ago, the same operation had been implemented on Huadian New Energy.
On July 23, Huadian Fortune transferred its 29% stake to China Huadian, and Huadian New Energy was also upgraded from a third-tier entity to a second-tier entity. The two transfers have not changed the controlling right at all, only adjusting the management radius. China Huadian is bringing its new energy assets from "subsidiaries of subsidiaries" into the core decision-making circle. Paradoxically, while the installed capacity is growing rapidly, profits are facing a tight situation. Is this a strategic vision, or just an illusion of scale?
The two transfers point to the same direction
The free transfer of state-owned shares is not a new thing in the central state-owned enterprise system, but two consecutive transfers within two months, what exactly are they pointing to?
After the transfer of Guodian Nanjing Automation is completed, China Huadian will hold 40.00% of the shares directly and 13.78% indirectly through Nanjing Automation General Factory, with the total proportion of 53.78% remaining unchanged, and the actual controller is still the State-owned Assets Supervision and Administration Commission of the State Council (SASAC). The same applies to Huadian New Energy: after the transfer, China Huadian holds a total of 72.72% of the equity directly and indirectly, and the control structure remains unchanged. There is no increase or decrease in equity, what changes is the length of the decision-making chain.
It is necessary to explain the seemingly boring concept of "property right level" here. For example, the headquarters of a central SOE group is the "grandfather", the second-tier entity is the "son", and the third-tier entity is the "grandson". Previously, both Guodian Nanjing Automation and Huadian New Energy were "grandsons", who needed to report their work through the "father" layer. Article 4 of the *Guidelines for the Work of Free Transfer of State-owned Enterprise Property Rights* issued by SASAC in 2009 clearly stipulates that the management level of enterprises after transfer shall not exceed three tiers in principle. In other words, the third tier is the red line, not a comfort zone. Moving the listed companies from the third tier to the second tier is not only a compliance action, but also a shift that directly brings the "grandson" to the knees of the "grandfather".
In the past, as a third-tier entity, Huadian New Energy needed to go through the intermediate layer of Huadian Fortune to communicate with the group headquarters in key links such as the distribution of UHV outward transmission channels and the signing of inter-provincial power trading agreements. After being upgraded to a second-tier entity, Huadian New Energy directly connects with the group's decision-making level, and the group is more capable of securing favorable conditions for the company in the distribution of national-level outward transmission channels and the signing of inter-provincial trading agreements.
The same is true for Guodian Nanjing Automation. Its power grid automation and power electronics business is the technical foundation for Huadian's large-scale desert, Gobi and barren land base outward transmission channels and intelligent operation and maintenance. After the level is upgraded, the decision-making efficiency of technical collaboration will be significantly improved.
When the two transfers are viewed in a larger reform context, the signal becomes clearer. According to statistics from reporters of Shanghai Securities News, the number of free equity transfer cases of central SOE-controlled listed companies that have been disclosed or are underway in 2026 has exceeded 10. COSCO SHIPPING Holdings completed the change of controlling shareholder in March, Baowu Magnesium Industry moved its controlling stake up to China Baowu in May, and the controlling shareholder of Times New Materials changed from Zhuzhou Institute to CRRC. The focus of central SOE restructuring has shifted from cross-group "legal entity merger" to the optimization of property right levels of core listed platforms. The two transfers of Huadian are following the same reform rhythm.
However, the roles of the two companies are different. Huadian New Energy is positioned as "the only platform for China Huadian to ultimately integrate its new energy business focusing on wind power generation and solar power generation". The weight of the four words "the only platform" lies in that it closes the door for other new energy assets within the group to be listed separately.
By the end of 2024, Huadian Group had about 10.77 million kilowatts of new energy power generation assets that had not yet been injected into Huadian New Energy. After the upgrade, the securitization path of these assets is unified, and the expected channel for asset injection is officially opened. The role of Guodian Nanjing Automation is more of a "technical backstage". As the main force of the group's science and industry sector, its automation equipment and intelligent production management platform need to support the desert, Gobi and barren land bases and virtual power plant projects that Huadian New Energy has deployed across the country. After the upgrade, the collaboration between technology companies and new energy development platforms has changed from "cross-level coordination" to "peer-level communication".
Drucker once said that profit is not the purpose of an enterprise, but the condition for its survival. The two transfers of Huadian solve the problem of management efficiency, but the survival condition — profit — is flashing a red light.
The scissors gap between faster installed capacity growth and slower profit growth
Huadian's sprint speed on the new energy track is rare in the historical context of the five major power generation groups. In the whole year of 2025, China Huadian added 34.64 million kilowatts of new energy installed capacity, ranking first among the "five major and six minor" power generation groups, with an increase of 43%. Among them, the newly added photovoltaic capacity was 19.63 million kilowatts, and the newly added wind power capacity was 14.2 million kilowatts, both ranking first among central SOE power enterprises in their respective categories. By the end of 2025, the new energy installed capacity exceeded 110 million kilowatts, an increase of 350% over the end of the 13th Five-Year Plan period.
The desert, Gobi and barren land bases are the core carrier of this growth. From 2024 to May 2026, the total installed capacity of the confirmed large-scale desert, Gobi and barren land base projects of the five major power generation groups in Northwest China has exceeded 98.85GW. Huadian ranks firmly first with 44.25GW, nearly twice that of the second-ranked Huaneng (24.5GW). The project at the northern foot of Tianshan Mountain in Xinjiang was put into operation in 2025, which is China's first new energy outward transmission base in desert, Gobi and barren land areas.
Huadian New Energy was listed in July 2025, raising 18.171 billion yuan, with a market value exceeding 300 billion yuan on the first day of listing. Since then, its stock price has been falling all the way, and by September 2026, it has fallen to around 3.93 yuan, with the total market value shrinking to about 163.9 billion yuan. The decline in stock price is not driven by sentiment, but reflected by the profit statement. In the first half of 2026, Huadian New Energy achieved operating revenue of 21.668 billion yuan, a year-on-year increase of 8.36%, but the attributable net profit was only 3.839 billion yuan, a sharp year-on-year drop of 38.47%.
This is not the dilemma faced by Huadian alone. In the same period, four leading central SOE new energy listed platforms — Huadian New Energy, Three Gorges Energy, Longyuan Power and China Resources New Energy — have a total installed capacity of about 247GW, and their attributable net profits fell by 38.47%, 68.05%, 29.10% and 29.55% year-on-year respectively. The core driver of profit contraction is the full market access of new energy. Since January 1, 2026, all grid-connected new energy power has entered the power market in principle, and electricity prices are formed through transactions. During the midday period of high photovoltaic power output, zero electricity prices or even negative electricity prices have appeared in many regions, and the market-based electricity price is generally 20% to 30% lower than the original benchmark electricity price. The era of "guaranteed quantity and guaranteed price" is coming to an end, and the acceleration of Huadian's installed capacity has just hit the downward cycle of electricity prices.
Is it a scale moat or a profit burden?
A question worth asking is: Why does Huadian still choose to increase investment against the trend under the background of general profit pressure?
The answer lies in its base-based development model. The four large desert, Gobi and barren land bases that Huadian New Energy obtained during the 14th Five-Year Plan period — the northern foot of Tianshan Mountain in Xinjiang, Tengger in Inner Mongolia, Tengger in Gansu, and Golmud East in Qaidam, Qinghai — have a planned total installed capacity of nearly 60 million kilowatts. The logic of base-based development is different from that of scattered projects: once the outward transmission channels are opened, the marginal cost drops sharply, and the scale effect is truly released. The project at the northern foot of Tianshan Mountain in Xinjiang has achieved good operating benefits after being put into operation, which proves that this logic is valid under specific conditions.
Huadian is also exploring new incremental space overseas. On September 1, 2026, the 154.7MW photovoltaic power station of Huadian Overseas Investment in Cotofenesti, Romania started construction. This is the first greenfield photovoltaic power station invested by China Huadian in Europe, which adopts double-sided high-efficiency modules and flat single-axis tracking brackets. It is expected to be put into operation in the first quarter of 2028, providing about 240 million kWh of clean energy annually. The project is not large in scale, but its signal meaning is clear: under the background of domestic electricity price pressure, the electricity price mechanism and revenue model of overseas markets may become another way out.
However, it will take at least two to three years for overseas projects to contribute profits from the start of construction, and they cannot hedge against the decline in domestic profits in the short term. Buffett has a saying that only when the tide goes out do you find out who is swimming naked. The full market access of new energy is that receding tide. The scissors gap between the growth rate of installed capacity and the growth rate of profit is expanding, and this gap will not be automatically bridged due to the upgrade of equity level. China Huadian Group has been rated as Class A in SASAC's annual business performance assessment for 13 consecutive years, with total assets exceeding 1.3 trillion yuan and installed power generation capacity reaching 280 million kilowatts. These figures are impressive enough, but the profitability quality of new energy assets is the key variable that determines the success or failure of this round of transformation.
The two equity transfers solve the problem of management efficiency, but cannot solve the problem of electricity prices. The installed capacity can be driven by investment, but profit growth can only rely on operational capability — in the complex game of market-based power trading, selling every kWh of green power at a reasonable price is the real test. Huadian's game is still ongoing, and the capital market has already voted with its feet. After the upgrade, whether the profit statement can be improved depends on the trading strategies in the next few quarters, rather than the level change in the announcement.