Supply side capacity elasticity may continue to weaken. The fixed asset investment in the coal industry has remained at a low level, which has led to the low speed of new production capacity in recent years. At the same time, under the background of “carbon peak and carbon neutralization”, the willingness of the coal industry to build new capacity has been greatly weakened. Even if we start to build new capacity from the current state of mind, considering the construction cycle of 4-5 years, the cycle of increasing capacity is too long. In terms of stock capacity, affected by the guaranteed supply policy in 2021, the batch stock capacity realized the nuclear increase of capacity, realizing the “legalization of overproduction and illegal capacity” of output. At the same time, guaranteed supply has tapped some production potential and has basically reached the capacity limit. Under the background of insufficient new capacity, the increase of stock capacity release in the future is also limited.
Demand is expected to release steadily under steady growth. In 2021, affected by the recovery of economic growth and poor hydropower output, the demand for thermal power was strong, but the output of downstream steel and building materials industries was affected by “dual control of energy consumption”. Looking forward to 2022, with steady growth, real estate infrastructure investment is expected to improve, and power demand is expected to grow steadily. At the same time, the connotation of “double control” has changed from controlling energy consumption to controlling emissions. The total energy consumption has been moderately relaxed, and the energy consumption of raw materials is no longer included in the dual control of energy consumption. The promulgation of policies such as double control of energy consumption is expected to increase the demand elasticity of building materials, steel and coal chemical industry.
The average price of thermal coal is expected to be about 1100 yuan / ton in 2022. We expect that there will still be a supply gap in the coal market in 2022. It is estimated that the average closing price of power coal in Qinhuangdao port in 2022 is about 1100 yuan / ton, an increase of 28% compared with 857 yuan / ton in 2021. The overall price trend is dominated by seasonal fluctuations.
The profit center of the coal industry is expected to rise. In 2021, the coal price rose very fast, and the price change of listed companies was slower than the market price. Especially in the stage of sharp price rise in October, listed companies did not raise prices as much as the market price. Therefore, the profit growth rate of listed companies was weaker than that of port prices. It is estimated that the fluctuation range of port price in 2022 is weaker than that in 2021. At the same time, the benchmark price of Changxie is expected to increase from 535 yuan / ton to 700 yuan / ton, and the coverage of Changxie is also improved, which means that the profit center of listed companies is expected to rise. With the rise of profit center and the enhancement of profit stability, the industry valuation is also expected to rise.
Investment suggestions: it is suggested to pay attention to two main investment lines. 1) the prelude to the transformation of traditional energy into new energy is opened. It is recommended that power investment energy, Yankuang energy, Huaibei Mining Holdings Co.Ltd(600985) with clear layout direction and China Shenhua Energy Company Limited(601088) , Shaanxi Coal Industry Company Limited(601225) with low capital expenditure, high cash flow and strong investment ability are recommended. 2) For companies with high performance flexibility, Shanxi Coal International Energy Group Co.Ltd(600546) , Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) are recommended.
Risk tips: 1) risk of economic slowdown; 2) Risk of sharp decline in coal prices; 3) The production progress of the mine under construction exceeded the expectation; 4) There is a deviation in the assumptions of the supply and demand balance sheet.
