There is limited downward space for thermal coal prices. Recently, the price of thermal coal has fallen slightly, mainly due to the failure of the expectation of “cold winter”, and the inventory of power plant has been replenished to a high level, but the daily consumption is lower than expected, resulting in the slowdown of procurement rhythm. However, the supply side maintains a high opening rate under the supply guarantee policy, resulting in a short-term mismatch between supply and demand. We believe that the supply and demand pattern of the industry may improve this week. A water seepage accident caused by coal theft occurred in Luliang area, Shanxi Province, at the supply end. The safety production inspection of the main producing areas has become more and more strict, and the output of some coal mines has decreased. Due to the completion of the annual task, the market supply may be tightened. The strong cold air on the demand side visited again, and the factors supporting the coal price began to appear gradually.
The transformation of coal enterprises and the opening of a new energy chapter. On December 15, 2021, Yankuang Energy announced its long-term development plan. The company will not only expand the coal output of traditional energy to 300 million tons, but also invest in new energy. It is planned that the installed capacity of new energy will reach 10GW and the hydrogen supply capacity will exceed 100000 tons / year within 5-10 years. Previously, photovoltaic and wind power have long been distributed in power investment energy, and there have been projects to realize grid connected power generation in recent years. Other companies such as Shaanxi Coal Industry Company Limited(601225) , China Shenhua Energy Company Limited(601088) have also adopted the way of industrial fund to layout the new energy field. Under the background of “carbon peak and carbon neutralization”, the transformation of traditional energy enterprises to new energy began.
Coal enterprises have the economic strength of transformation. Due to the lack of fixed asset investment in the early stage of the industry, the bottleneck of coal production capacity may continue. Under the background of stable economy, it is expected that the future coal price does not have the basis for sharp decline, so the profits of coal enterprises are generally good. Capital expenditure generally declined, and coal enterprises generally have rich economic strength, which is enough to support them to transform and invest in new energy. At present, the valuation of the sector is basically at the bottom of history, and the transformation helps to improve the valuation of the company.
Based on strong investment ability, industry companies are expected to usher in value revaluation. At present, many companies have not announced a clear investment plan or transformation direction, but they have rich cash flow because they have no large capital expenditure and debt burden, Its own “cash value” (investment ability) has not been recognized by the market, but for the current new energy field, the capital problem may become the biggest threshold to enter the market, and the cash value of these companies is expected to be revalued. Therefore, we believe that companies with high cash and high dividends also deserve attention.
Investment suggestions: 1) companies with stable profits and high cash flow are also expected to face value revaluation. It is recommended to pay attention to China Shenhua Energy Company Limited(601088) , China Coal Energy Company Limited(601898) , Shanxi Lu’An Environmental Energydev.Co.Ltd(601699) , Shaanxi Coal Industry Company Limited(601225) . 2) The transformation of traditional energy enterprises to new energy kicked off, and Yankuang energy and power investment energy were recommended. 3) Under the dual carbon target, we recommend Shanxi Blue Flame Holding Company Limited(000968) as the target for methane emission reduction.
Risk tip: risk of economic slowdown; Risk of falling coal prices; Risk of policy change.
