event
The recently held national coal fair announced the draft proposal for the signing and performance of long-term coal contracts in 2022. The draft is formulated by the national development and Reform Commission, which specifies that the signing scope of the long-term coal association in 2022 will be further expanded, and coal production enterprises with an approved capacity of 300000 tons and above will be included in the signing scope in principle; On the demand side, power generation and heating enterprises are required to sign a long-term agreement for 100% of the coal except imported coal. In terms of price, the pricing mechanism of “benchmark price + floating price” remains unchanged, and the power coal long-term association in the new year will be adjusted once a month; The adjustment range of 5500 kcal thermal coal is 550-850 yuan, of which the benchmark price of underground coal long-term association is 700 yuan / ton, an increase of about 31% compared with the previous 535 yuan.
Core view
The benchmark price of Changxie coal is relatively reasonable, and the “coal electricity linkage” can be expected to reappear in the future; In 2022, the risk of large-scale loss of thermal power performance is basically relieved, and the logic of changing the cyclical profit model into the attribute of public utilities is gradually realized.
Considering the fluctuation of electricity price, it is estimated that the market-oriented transaction proportion of coal power is 100% and the average benchmark electricity price is 0.37 yuan / kWh. If it is assumed that the high energy consuming industry accounts for 40% of the market-oriented electricity, the electricity price rises by 30%, and the electricity price of other non high energy consuming industries rises by 20%, assuming that the coal consumption per kilowatt hour is 300 g / kWh, the overall electricity price rises by 8.88 points / kWh, which can offset the increase of 296 yuan / ton of standard coal; Assuming that the high energy consuming industry accounts for 40% of the market-oriented electricity and the electricity price rises by 50%, the overall electricity price increases by 11.84 cents / kWh, which can offset the increase of 395 yuan / ton of standard coal.
We assume that the breakeven point of a thermal power enterprise under the benchmark electricity price (without considering the fluctuation of electricity price) is 810 yuan / ton (standard coal into the furnace). After considering the upward elasticity of electricity price, the breakeven point is expected to increase to 1106 (810 + 296) to 1205 (810 + 395) yuan / ton. According to the 2022 long-term cooperative coal pricing policy, the adjustment range of 5500 kcal thermal coal is 550-850 yuan / ton, which is converted into the standard coal price of 700-1082 yuan / ton, and the benchmark price of 700 yuan / ton corresponds to 891 yuan / ton. From the above calculation results, the break even point of the thermal power enterprise is likely to cover the operation range of long-term cooperative coal price, and has great profit elasticity 。 According to the calculation of price difference (breakeven point – cost of standard coal into the furnace) of 100 yuan / ton, the pre tax profit of power plants with annual coal consumption of one million tons is 100 million yuan; the pre tax profit of large thermal power enterprises with annual coal consumption of 100 million tons is 10 billion yuan.
The fundamentals of thermal power are in the dark, and factors such as coal price, electricity price and utilization hours are expected to release greater performance flexibility. The long-term dislocation of “market coal” and “planned electricity” will be gradually corrected. At that time, thermal power will periodically weaken and return to the attribute of public utilities, create sufficient cash flow with stable roe return, and support the capital expenditure or considerable dividend scale of transformation and development. In the medium and long term, thermoelectric potential will gradually transition from electric power supply to flexible peak shaving power supply, and is expected to usher in a new cost recovery mechanism; The last round of cash flow in its life cycle will help thermal power enterprises’ “Second Entrepreneurship”, and the former thermal power leaders may have the most potential to become new energy giants in the future.
Investment proposal and investment object
When thermal power assets are expected to usher in a bottom reversal, we are particularly optimistic about the value revaluation brought by the transformation of traditional thermal power and the development of new energy. It is suggested to pay attention to Huaneng Power International Inc(600011) (600011, not rated), China Resources Power (00836, not rated) with high-quality assets, leading efficiency and rapid pace of new energy transformation, as well as Fujian Funeng Co.Ltd(600483) (600483, not rated) with stable thermal power assets and may share high-quality sea breeze resources in Fujian in the future.
Risk statement
Changes in assumptions will lead to deviations in the calculation results; The content of the policy draft may change subsequently; If the trend of electricity price and coal price is less than expected, it will lead to the deterioration of thermal power fundamentals.
