The investment logic of the industry has changed from excessive pessimism to substantial improvement. Since the beginning of the year, the coal sector has experienced three stages of investment logic evolution. From January to October 2021, the global liquidity is abundant, inflation is enhanced, bulk commodities are collectively stronger, over production is punished, environmental protection and safety supervision is stricter, and the impact of China Australia relations has exacerbated the contraction of coal supply, and the sharp rise of coal prices has promoted the rise of the coal sector; From mid October to mid November, the policy mix strongly increased production and guaranteed supply, the coal price fell sharply, and the index also fell sharply; Since mid November, the investment sentiment of the sector has hit the bottom and rebounded. In addition, the national development and Reform Commission has issued the latest Changxie coal price pricing mechanism, which has promoted the substantial improvement of the investment sentiment of the sector.
Under the long-term logic, the cycle fluctuation of the coal industry will be weakened and the profit space will be stable. In the long run, the coal supply is still limited, the supply growth bottleneck is obvious, the enthusiasm of coal enterprises to invest in new mines is weak, the economy is poor, the construction cycle of new production capacity is long and the approval procedures are complicated, which restrict the growth of coal production capacity. The double carbon background determines that the coal supply will remain stable, Sanxi and Xinjiang regions with excellent resource endowment will always be strong. Enterprises with layout in such regions will continue to benefit from the process of improving resource concentration. At the same time, the stability of coal price is very important to the healthy development of the whole industry, the periodicity of the industry is weakened and the profit stability is enhanced, The good cash flow situation of coal enterprises in recent years has also laid a solid foundation for the in-depth development of some coal enterprises to new energy, new materials and industries.
In the medium and short term, the investment opportunities in the coal sector are highlighted. In the medium and short term, the policy of increasing coal production and ensuring supply is expected to exit after the coal price is stable. Superimposed on the arduous task of six guarantees and six stabilities of macro-economy in 2022, the phased and regional economic stimulus policies may further stimulate the enthusiasm of upstream resource products procurement and promote the investment sentiment and return on investment of the coal sector.
The supply and demand pattern of sub sectors is differentiated and transformed into a highlight of coal enterprises. Power coal will face a double rise pattern of supply and demand in the future to achieve a basic balance; Coking coal sector may have both supply and demand decline in the future; The coke plate may achieve a tight balance between supply and demand on the basis of further supply contraction. With the continuous promotion of the reform of the electricity price pricing mechanism, the coal industry is expected to obtain a broader development space. With the establishment of the coal power linkage mechanism, the adjustment of the benchmark price of the long-term association plays a key role in stabilizing the upstream and downstream. Recently, the upper level has made frequent calls for maintaining the stability of the real estate market, the stable and healthy development of the real estate industry chain can be expected, and there is a marginal improvement trend on the demand side. As the basic energy, coal still plays the role of ballast in the process of energy structure transformation. On the premise of providing a solid foundation for the rich cash flow of coal enterprises, they have transformed to the depth of the industrial chain and new energy and new materials on the basis of consolidating their main business, becoming a major investment highlight of the plate in the future.
Investment suggestion: on the whole, under the background of carbon neutralization, the supply continues to shrink and the operation barriers of leading coal enterprises continue to rise, which is expected to improve both profitability and valuation. We maintain the industry “recommended” rating, It is suggested to focus on the leading stock China Shenhua Energy Company Limited(601088) (601088. SH) in the integrated operation of coal and electricity, the Shaanxi Coal Industry Company Limited(601225) (601225. SH) with superior resource endowment and good growth, the leading company in the coking coal industry Shanxi Coking Coal Energy Group Co.Ltd(000983) (000983. SZ) with accelerated pace of state-owned enterprise reform and promising growth, and Shanxi Meijin Energy Co.Ltd(000723) (000723. SZ) and Shan Xi Hua Yang Group New Energy Co.Ltd(600348) in the transformation of new energy and new materials and the development of new energy business （600348.SH）。
Risk tip: the industry faces the risks of falling coal prices, capacity investment and less than expected reform of state-owned enterprises.
