With the two sessions approaching, the concept of “double carbon” is heating up again. In the new year’s government work report, all localities proposed to comprehensively promote carbon peaking and carbon neutralization, and actively build a synergistic mechanism for pollution and carbon reduction. Especially under the impact of the epidemic, the changes in the past century have accelerated, and the external environment has become more complex, severe and uncertain. When formulating the expected targets for economic growth this year, all localities have fully reflected the work requirements of keeping stability at the forefront and seeking progress while maintaining stability. Facing the pressure brought by the complex and severe economic situation, the local two sessions also released a stronger green development signal.
The advantages of green power with carbon reduction properties will be further highlighted. In terms of electricity, renewable energy, large bases, pumped storage, energy storage, etc. are the hot words mentioned most in the energy work of all provinces in 2022, and they are also the focus of the work in 2022. With the continuous promotion of the “double carbon” goal, the advantages of green power with carbon reduction attribute will be further highlighted, and the demand is expected to continue to increase. It is expected that this year, the detailed rules for the minimum proportion of green power consumption of high energy consuming enterprises in all provinces, the detailed rules for green power trading in all provinces, as well as the deductible carbon emissions of green power will be introduced.
The market demand for cement and glass has warmed up. With the end of the Spring Festival holiday, the market gradually started and recovered, the operating rate of downstream construction sites showed a steady upward trend, and the demand of cement market warmed up. It is expected that the two sessions will focus on steady growth, and the upward demand will drive the increase of cement price. In terms of supply, according to the staggered peak kiln shutdown plan announced by various provinces across the country, the number of kiln shutdown days in the first quarter generally exceeded that in the same period last year. It is expected that the cement supply will remain stable after the festival. It is suggested to pay attention to the leading enterprises in the cement area. The spot price of float glass continued to rise this week. After the festival, the middle and lower reaches of float glass were further replenished, especially the centralized preparation of processing plants, which drove the rise of glass prices to a certain extent. With the centralized commencement of processing plants after the festival, it is expected that the glass market demand will grow steadily, driving the price of float glass to further increase. The downstream demand of glass fiber, such as wind power and new energy vehicles, is highly related to carbon neutrality. Benefiting from the expansion of downstream demand for new applications, the industry has great development space.
Under the steady growth policy, the coal demand side has strong support. The two sessions will be held in March, and the work reports of local governments in 2022 have been released. According to our sorting, local governments have fully implemented the spirit of the central economic work conference “increasing the consumption capacity of new energy and promoting the optimal combination of coal and new energy”. More provinces require to release and ensure the supply of high-quality coal production capacity this year (such as Shanxi, etc.), Under China’s stable economic growth policy, the work reports of local governments mentioned the need to expand effective investment, especially to accelerate investment in traditional and new infrastructure construction, which provided strong support for the demand side of coal.
Investment suggestions: environmental protection and public utilities: China Three Gorges Renewables (Group) Co.Ltd(600905) (600905. SH), China Power (2380. HK), Huaneng Power International Inc(600011) (600011. SH), Henan Bccy Environmental Energy Co.Ltd(300614) (300614. SZ), Qingdao Guolin Environmental Technology Co.Ltd(300786) (300786. SH), Jiangsu Huahong Technology Co.Ltd(002645) (002645. SZ), Beijing Geoenviron Engineering & Technology Inc(603588) (603588. SH), Shandong Intco Recycling Resources Co.Ltd(688087) (688087. SH). Building materials: ad shares (002641. SZ), Guangdong Kinlong Hardware Products Co.Ltd(002791) (002791. SZ), Beijing New Building Materials Public Limited Company(000786) (000786. SZ), Beijing Oriental Yuhong Waterproof Technology Co.Ltd(002271) (002271. SZ), Keshun Waterproof Technologies Co.Ltd(300737) (300737. SZ), Zhejiang Weixing New Building Materials Co.Ltd(002372) (002372. SZ), Zhuzhou Kibing Group Co.Ltd(601636) (601636. SH), China Jushi Co.Ltd(600176) (600176. SH) are recommended. Coal: recommended China Shenhua Energy Company Limited(601088) (601088. SH), Shaanxi Coal Industry Company Limited(601225) (601225. SH), Shanxi Coking Coal Energy Group Co.Ltd(000983) (000983. SZ), Shanxi Meijin Energy Co.Ltd(000723) (000723), Shan Xi Hua Yang Group New Energy Co.Ltd(600348) (600348).
Risk warning: the risk of sharp fluctuations in raw material prices; The risk that the downstream demand is less than expected; The risk that the landing effect of production restriction is not as good as expected; The risk that the policy strength is less than expected; The risk that the new capacity of the industry exceeds the expectation; The risk of sharp decline in coal prices under the pressure of policy regulation.
