Here's how Chinese utilities, energy firms performed last year

Gas and renewables are the stellar sub-sectors.

Forty-one Chinese utility and clean energy companies reported 2016 results last month with 11 beats, 8 in-lines and 22 missing consensus, according to Citi.

"After results, we keep gas and renewables as our top two sub-sectors and re-position Southeast Asia power (which includes VPower) at third, ahead of wind," it said.

Most PRC IPPs such as Huaneng, Huadian and China Power International are around the breakeven level subject to increased unit coal cost.

Here's more from Citi:

Tariff hike however could not be expected within this year under annual review with the last review done in early 2017 with no increment.

Their average dividend yield would shrink from 4.6% in 2016E to 2.8% in 2017E. We do not expect a merger between China Shenhua Group and China Datang Group as the former would likely consolidate with other coal miners instead of power companies, in our view, amid coal industry consolidation.

National wind capacity installation peaked at 30.5GW in 2015 and fell to 23.4GW in 2016, and should be at 24-25GW in 2017E. Wind farm operators, whose net profit growth depends on (i) capacity addition in previous year as new capacity is often added in the last quarter; and (ii) utilization hour change year-on-year, would have lowteen profit growth (13.6% yoy for Longyuan and 12.8% yoy for Huaneng Renewables) in 2017E.

While these profit growths would be lower than those a year ago at 18.7% and 43.0% respectively due to decelerated capacity growth, they have entered a new phase with positive free cash flow since 2016 and are de-gearing, hence a healthier financial situation.

Meanwhile, we are cautious on PRC wind power equipment makers amid decelerated capacity growth and thus less equipment demand growth than before.