Downgrade Moat Trend Rating to Negative, Amid Worsening Supply and Demand Dynamics for the Sector

We maintain our no-moat rating on China's independent coal-fired power producers, or IPPs, under our coverage, but downgrade moat trend ratings to negative from stable, amid worsening supply and demand dynamics. As China's GDP growth slows and the economy moves toward a more sustainable growth model over the next five to ten years, we expect power demand growth to slow. Falling renewable energy costs, and rising climate concerns, are shifting the fuel mix toward cleaner energy. We think weakening demand growth, expanding clean and renewable energy, and stricter emission regulations will crowd out coal-fired power generation's competitiveness, with utilization hours under pressure over the next decade.