Subject to the continuous soaring and record high price of power coal in 2021, the performance of listed power companies has experienced unprecedented huge losses.
The performance forecast shows that the net profit attributable to the parent company of the main listed power enterprises of the five power generation groups decreased sharply in 2021, and two of them had a pre loss of more than 10 billion. Among them, Huaneng Power International Inc(600011) (600011. SH) is expected to have a net loss of 9.8-11.7 billion yuan in 2021, a year-on-year decrease of 314.68% – 356.30%; Datang International Power Generation Co.Ltd(601991) (601991. SH) expects a net loss of 9-10.8 billion yuan in 2021, a year-on-year decrease of 396.05% – 455.26%; Huadian Power International Corporation Limited(600027) (600027. SH) expects a net loss of 4.5-5.3 billion yuan in 2021, a year-on-year decrease of 207.68% – 226.82%; Gd Power Development Co.Ltd(600795) (600795. SH) expects a net loss of 1.6-2.3 billion yuan in 2021, a year-on-year decrease of 163.67% – 191.52%; China Power (02380. HK) expects a net loss of 500-600 million yuan in 2021, a year-on-year decrease of 129.27% – 135.13%.
For the reasons for the performance loss, the above companies all proposed that it was mainly due to the sharp rise in coal-fired costs.
Performance changes and reasons of power listed companies under five power groups in 2021
The performance of local power listed companies also plummeted. According to the sorting of surging news, Guangdong Electric Power Development Co.Ltd(000539) (000539. SZ) expects a net loss of 2.9-3.5 billion yuan in 2021 and a net profit of 1.746 billion yuan in the same period of last year; Beijing Jingneng Power Co.Ltd(600578) (600578. SH) in 2021, the advance loss was 2.808 billion-3.210 billion yuan, a year-on-year decrease of 301.15% – 329.94%; The performance of An Hui Wenergy Company Limited(000543) (000543. SZ), Henan Yuneng Holdings Co.Ltd(001896) (001896. SZ), Zhejiang Zheneng Electric Power Co.Ltd(600023) (600023. SH), Shanghai Electric Power Co.Ltd(600021) (600021. SH) changed from profit to loss, and the range of pre loss in 2021 reached more than 1 billion yuan.
The above company explained that last year, the whole society’s electricity demand increased more than expected, but the sharp rise in fuel costs caused large-scale continuous losses to thermal power enterprises. Beijing Jingneng Power Co.Ltd(600578) put forward that during the reporting period, the market coal price continued to rise, especially when the company undertook the supply guarantee task of “all the coal that should be paid” in the fourth quarter, the coal price rose sharply and reached an all-time high. Although the sales price has been raised, its increase is far lower than that of raw material coal.
Throughout 2021, China’s coal prices showed a trend of “first rising and then falling, and then rising and then falling”. At the end of February last year, the coal price was about 571 yuan / ton. By October 18, the price of 5500 kcal power coal in Qinhuangdao had soared from an average of 577 yuan / ton in 2020 to the highest point in history, 2600 yuan / ton. The sharp increase in fuel costs has plunged coal-fired power enterprises into a state of “upside down power generation and losses across the board”, and power and production are limited in many places. Since then, the national development and Reform Commission has launched the combination of guarantee and supply, the coal output has rebounded rapidly, and the coal price has fallen below 1000 yuan.
In the context of power shortage in many places, the reform of power marketization has taken a big step. In October last year, the national development and Reform Commission issued a notice to expand the floating range of transaction prices in the coal-fired power generation market to no more than 20% in principle, and the market transaction price of high energy consuming enterprises is not limited by an upward floating of 20%.
This has played a role in reducing losses to a certain extent, but due to the sharp rise in costs, the rise in electricity prices has failed to fill the kWh loss of power enterprises.
Taking Huaneng Power International Inc(600011) as an example, Citic Securities Company Limited(600030) Research Report data show that driven by measures such as the expansion of the upper limit of the floating range of electricity price, the company’s settlement electricity price in Q4 increased by 0.06 yuan / kWh (+ 14%) to 0.47 yuan / kWh month on month. The increase in electricity price has been initially reflected, which moderately helps the company alleviate the cost pressure caused by the continuous rise of coal price. However, considering the sharp rise in coal price, it is judged that the profit loss of Q4 thermal power unit of the company may be expanded to 0.10 yuan / kWh.
In the “analysis and prediction report on the national power supply and demand situation in 2021-2022” recently released by China Power Union, it is said that in 2021, the national raw coal output will increase by 4.7% year-on-year. From March to September, the raw coal output of each month was close to zero growth or negative growth, the growth rate of raw coal output picked up significantly in the fourth quarter, and the tension of power coal supply was alleviated. The shortage of coal supply has led to the price of power coal hitting record highs. Due to the irrational rise in the price of electric coal and the sharp rise in fuel costs, coal and electricity enterprises and cogeneration enterprises continued to suffer substantial losses. It is roughly estimated that in 2021, the rising price of electric coal will lead to an additional increase of about 600 billion yuan in the purchase cost of electric coal for national coal and power enterprises.
According to the statistics of China Electricity Council, since August last year, the coal power sector of large power generation groups has suffered overall losses. From August to November, the loss of coal power sector of some groups reached 100%, and the cumulative loss of the whole year reached about 80%. At the end of 2021, the price level of power coal is still significantly higher than the affordability of coal and power enterprises.
The loss of power generation enterprises has been omened from the first three quarters of 2021. By the fourth quarter, despite the downward trend of coal prices and the upward trend of electricity prices, the loss of power generation enterprises, especially those with large thermal power assets, had not been greatly improved.
“Coal power has lost money before, but it has never lost so much and so much as in 2021.” Five major power sources once told surging news that the financial situation of the power generation industry in 2021 was worse than that in 2008. In 2008, the price of primary energy in major countries generally rose, and China’s coal price rose from 200-300 yuan / ton to more than 1000 yuan with the international market. Under the mode of “market coal and planned electricity”, the rise of electricity price was restrained, resulting in large-scale losses of thermal power enterprises. In 2021, although the industry has ushered in a series of favorable factors such as increased power generation, expanded sales revenue and warming power policies, it is still difficult to offset the sharp increase in fuel costs. Coal power enterprises cannot effectively transfer costs, resulting in large-scale losses.
In sharp contrast to the loss of power generation, the performance of many listed coal enterprises rose sharply.
China’s coal giant China Shenhua Energy Company Limited(601088) (601088. SH) expects a net profit of about 50.3 billion yuan in 2021, a year-on-year increase of 28%. Due to the year-on-year increase in the unit production cost of self-produced coal, the unit procurement cost of purchased coal and the unit power sales cost of coal-fired power plants, the year-on-year decrease in investment income and the year-on-year increase in the provision of impairment losses, Shenhua’s profits from the year-on-year increase in coal sales and average sales price were partially offset.
In addition, Shanxi Coal International Energy Group Co.Ltd(600546) (600546. SH) expects a net profit of 4.5-5 billion yuan in 2021, with a year-on-year increase of 444.14% – 504.59%; Yankuang energy (600188. SH) expects a net profit of 16 billion yuan in 2021, a year-on-year increase of 124.67%; Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) (601001. SH) estimates that the net profit in 2021 will be 4.868 billion yuan, with a year-on-year increase of 455.84%. According to the incomplete statistics of surging news, as of January 29, 18 of the 23 coal enterprises in the coal mining industry had released the performance forecast for 2021, of which 17 had a year-on-year increase in net profit and 12 had an increase of more than 100%.
The national development and Reform Commission announced on January 30 that recently, China’s daily coal output has remained at a high level, and the coal supply of national unified dispatching power plants has continued to exceed the coal consumption. At present, the coal storage has reached 170 million tons, a record high. With the overall stability of market supply and demand, China’s coal spot and futures prices have risen too fast recently, which has an adverse impact on the stable operation of the coal market and the safe and stable supply of energy. The national development and Reform Commission has paid close attention to the changes in coal prices and has held a special meeting to deploy the work of stabilizing coal production, supply and price during the Spring Festival. At the same time, we will work with relevant departments to further strengthen market price regulation and supervision, severely crack down on illegal price behaviors in the spot and futures markets, and ensure that coal prices operate within a reasonable range.
