Introduction to this report:
In January, the output may decline month on month, and the high-intensity supply guarantee is under continuous pressure; Policy regulation leads the coal price to fall, but it is in line with expectations, and the off-season is not light or repeated; In the first quarter, the market starts and alpha opportunities are explored. There is room for increasing holdings with high dividend + transformation.
Summary:
In January, the output may have a month on month or decline, and the high-intensity supply guarantee is under continuous pressure. After the national development and Reform Commission proposed to increase production and ensure supply in the winter of 2021, the national daily coal output increased rapidly and reached the peak in December. China’s daily average output reached 12.41 million tons, reversing the situation of coal supply and demand in one fell swoop. However, after entering January, the coal production intensity may decline to a certain extent, which can be seen from the production data of January 22 disclosed by listed companies. The self-produced coal output of China Shenhua Energy Company Limited(601088) , Shaanxi Coal Industry Company Limited(601225) , China Coal Energy Company Limited(601898) is – 4.1%, – 8.8% and 3.0% month on month respectively, which can be used as the observation indicators of Inner Mongolia, Shaanxi and Shanxi, the main coal producing areas in China. It is expected that the national output in January will decline month on month compared with December, and it is difficult to maintain high-intensity supply. In addition, after the national development and Reform Commission reiterated the supply guarantee in February, some mining accidents occurred again in some mining areas. With the end of the follow-up supply guarantee season, it is expected that the capacity utilization rate of some temporary production increase, illegal production increase and high-cost coal mines will decline. Under the environment of “stability first”, the follow-up production is expected to remain at a relatively stable level.
Policy regulation led to the decline of coal prices, but it was in line with expectations, and the off-season was not light or repeated. On February 14, 2022, the spot q5500 reference price of cctd Bohai Rim power was significantly reduced to 900 yuan / ton, the original 1020 yuan / ton was reduced by 120 yuan, which was consistent with the upper limit of port price required by the meeting of the national development and Reform Commission on February 12. As the market had expected that the coal price would continue to fall after the off-season, this adjustment will make the coal price cut in one step, the subsequent coal price will remain relatively stable, and the strong demand for steady growth will also support the coal price. In addition, the benchmark price of Indonesian thermal coal was raised to US $188.4/t in February (US $158.5 in January), which has exceeded 1237 yuan / T in terms of the cost of arrival in China (q5500), which is higher than the cost of purchasing Chinese coal by the power plant. It is expected that the power plant will prefer Chinese coal and further increase the demand for power coal. We judge that with the coal price falling back to the price limit range of the national development and Reform Commission, the coal price will run along the upper limit of the range.
Investment in coal stocks in 2022 should not be too tangled with coal prices and government regulation, explore alpha opportunities, and have more room for increasing holdings with high dividend + transformation. After the ups and downs of the coal market in 2021, the government has sufficient means to maintain the stability of coal prices. The high performance and high flexibility brought by the sharp rise in prices will be difficult to appear in 2022, but it can be clear that the government has tolerance for relatively high coal prices, the coal prices will operate at a high level, and the long-term agreement price will increase significantly year-on-year, As a result, the profit center of the enterprise has jumped to a higher level. It is estimated that the profit of the sector increased by about 80% in the first quarter, and value discovery will become the main theme of coal stock investment in 2022. In February 2022, the q5500 long-term association price of Qinhuangdao Power Coal was 725 yuan / ton. Under the new mechanism, the high long-term association price was maintained and significantly increased year-on-year, and the capital expenditure cash flow finance profit dividend will be continuously optimized. With the coal enterprises will successively disclose their annual reports after March 2022, the new dividend scheme under the high long-term association and high profit is worth looking forward to. In addition, the State encourages the treatment of coal mining subsidence areas through the construction of photovoltaic projects. We judge that some coal enterprises will use local resources to obtain green power projects, and the transformation is expected to accelerate.
Industry review. As of February 18, 2022, the market price of Qinhuangdao q5500 was 1000 yuan / ton (- 1.0%), and the inventory of Qinhuangdao port was 5.02 million tons (0.2%). The price increase of Jingtang Port’s main coking coal depot (made in Shanxi) is 2500 yuan / ton (- 11.7%), the port’s primary coke is 2833 yuan / ton (0.0%), the coking coal depot is stored in three ports with a total of 2.64 million tons (- 9.3%), and the operating rate of coke enterprises with more than 2 million tons is 72.7% (- 2.80 PCT).
Risk warning. The macro-economy is less than expected; Coal supply remained high.
