One week market review
This week, the CSI 300 index rose 1.08%, the power and utility index fell 1.21%, and the weekly relative yield was – 2.29%. In the Shenwan industry category, the increase of public utilities ranked 27th in 28 industries. By sector, the environmental protection sector rose 2.74%; Among the sub sectors of the power sector, thermal power fell by 2.75%; Hydropower fell by 2.17%, and new energy power generation rose by 1.74%; Water sector rose 1.48%; The gas sector rose 0.86%.
Comments on changes
Bceg Environmental Remediation Co.Ltd(300958) (25.50%) and Tus Environmental Science And Technology Development Co.Ltd(000826) (21.13%) increased significantly, benefiting from the notice on carrying out the third national soil survey issued by the State Council. The survey objects are the soil of cultivated land, garden land, forest land, grassland and some unused land in China. It will take nearly four years to find out the soil condition of agricultural land in China. Fujian Yongfu Power Engineering Co.Ltd(300712) (18.51%) participated in energy storage and photovoltaic design and general contracting business, with a large rebound. The investment in sewage treatment industry (2894.9%) is mainly promoted by the policy of water treatment.
Special research: multiple ministries and commissions jointly issued documents to indicate the direction of investment and promote the steady growth of industrial economy
On February 18, several ministries and commissions jointly issued the notice on printing and Distributing Several Policies to promote the steady growth of industrial economy, which proposed investment policy support and guidance, and took multiple measures at the same time, which improved the important position of investment in new energy power industry, coal power transformation and transmission related industries in the steady growth of industry (separated from the first two policies on investment and foreign trade and foreign investment). It points out the direction for local investment expansion in 2022, clearly puts forward the requirements for energy conservation and carbon reduction, and gives policy and financial guarantee and support, which is expected to accelerate the efficiency of local independent investment and investment introduction.
Investment strategy
Public utilities: 1. The reform of electricity marketization has been promoted, and the electricity price can better reflect the supply and demand, cost and environmental value. The construction cost of new energy has been falling continuously. The new energy operators have “triple” certainty, and the growth rate of “quantity” – scenery installed capacity has high certainty; “Price” – the price of thermal power rises, the green premium is superimposed, and the profit space of green power is opened; “Performance” – this year’s low-cost fans and rush to install sea breeze ensure the performance of next year. 2. The policy promotes the optimal combination of coal and new energy. The policy of Changxie coal price + Changxie electricity price is expected to be implemented, the linkage mechanism is formed, the market-oriented trading of coal and electricity is expanded, and the turning point of thermal power profit appears. 3. The construction of new power system with new energy as the main source will deeply benefit new energy power producers and comprehensive electric energy services. It is recommended to actively transform new energy sources with abundant cash flow, leading thermal power, China Resources Power, Huaneng Power International Inc(600011) etc; Longyuan Power, a new energy operation leader China Three Gorges Renewables (Group) Co.Ltd(600905) with capital cost and resource advantages, recommends good cash flow, “nuclear power and new energy” two wheel drive China National Nuclear Power Co.Ltd(601985) and comprehensive electric energy service Suwen Electric Energy Technology Co.Ltd(300982) . Environmental protection industry: 1. High performance and low valuation; 2. The business model is improved, and the operation indicators continue to improve: 3. The stable growth operation attribute appears, and the yield and cash flow indicators continue to improve.
Risk tips
The environmental protection policy is not as expected; The growth rate of power consumption decreased; Electricity price reduction; The terminal price of natural gas has been reduced.
