Performance forecast of environmental protection and public utilities: in the public utilities sector, 71 of the 116 listed companies we counted issued annual performance forecast for 2021. From the perspective of net profit attributable to the parent company, 38 of the 71 companies achieved profits in 2021 and 33 companies suffered losses. According to the industry segments of each company, benefiting from the large-scale production of wind power and photovoltaic, the performance of pure new energy operating enterprises is outstanding. Affected by the high coal prices in September and October, the cost side of thermal power enterprises increased significantly in 2021, and most thermal power enterprises suffered huge losses in 2021. Among the 19 listed companies in 2021, we have made a total of 49 annual profits and achieved a total of 102 net profits in 2021. The performance of environmental protection companies presents the characteristics of individual stocks from bottom to top, and the reasons for profits and losses of different companies are different.
Public sector: thermal power performance is still under pressure of slight loss in the short term, and it is expected to rebound to the bottom in 2022: in September and October 2021, coal prices rose at a historical level, resulting in huge losses for thermal power. With the nuclear increase of coal production capacity and the superposition of a series of regulatory measures, the coal price fell sharply from the high point at the end of 2021. In January 2022, under the influence of multiple factors, the coal price showed an upward trend. According to our model, based on the calculation of electricity price and coal price level in January 2021, thermal power enterprises still have a small loss pressure in January 2022, the overall profit of the industry is at the edge of the critical point, and high-quality thermal power enterprises are expected to make a small profit. Looking forward to the whole year of 2022, with the continuous realization of market-oriented electricity prices in various provinces and cities and the continuous regulation of coal prices, we expect that the annual loss risk of thermal power enterprises in 2022 will be small. At the same time, with some thermal power enterprises actively transforming into new energy, the large-scale operation of wind power and photovoltaic projects will further contribute to the performance, Thermal power enterprises (especially thermal power transformation new energy enterprises) are expected to rebound in performance, and the prosperity of the sector is expected to continue to improve.
Environmental protection sector: the performance growth is highly differentiated, focusing on environmental protection + target: among the 49 environmental protection enterprises that have disclosed the performance forecast, 7 enterprises are mainly engaged in solid waste treatment business and 13 enterprises are mainly engaged in water treatment and water affairs. The performance of the subject matter of solid waste treatment in 2021 is good, and the net profit attributable to the parent company of 5 of the 7 enterprises has achieved positive growth. The main reason for the performance growth is the increase of business income and profit driven by the operation of new projects; Nine enterprises in the water treatment and water sector achieved positive growth in the net profit attributable to the parent company in 2021. However, due to the impact of asset impairment, asset restructuring and obtaining government subsidies, some enterprises have high non recurring profits and losses. Some environmental protection enterprises have begun to expand and transform to other business areas, which will help open their growth ceiling. It is suggested to focus on environmental protection + targets.
Investment suggestion: the public sector mainly recommends nuclear power + new energy two wheel drive. Both business sectors have room for both volume and price to rise [ China National Nuclear Power Co.Ltd(601985) ], and projects under construction are high. Offshore wind power projects under construction account for a large proportion in 2021, and the target [ China Three Gorges Renewables (Group) Co.Ltd(600905) ] [ Huaneng Power International Inc(600011) ] [ Shanghai Electric Power Co.Ltd(600021) ] [ Cecep Wind-Power Corporation(601016) ] has both short-term performance growth and certainty; The environmental protection sector mainly recommends environmental protection + targets, and actively arranges [ Wangneng Environment Co.Ltd(002034) ] in the lithium battery recycling business sector and [ Road Environment Technology Co.Ltd(688156) ] in the rapid expansion of distiller’s grains recycling capacity.
Risk tip: the policy promotion is not as expected, the project promotion is not as expected, the coal price continues to operate at a high level, the risk of electricity price reduction, and the risk of water shortage is not as expected
