Market review: from March 14 to March 18, the power, environmental protection, gas and water sectors fell by 4.25%, 4.30%, 5.63% and 4.96% respectively, and the CSI 300 index fell by 0.94% in the same period.
The national development and Reform Commission issued the notice on carrying out the special verification of the signing and performance of medium and long-term coal contracts in 2022. The notice requires all enterprises to sign sufficient medium and long-term contracts, the number of medium and long-term contracts signed by coal enterprises should reach more than 80% of their own resources, and the annual coal consumption of power generation and heating enterprises should achieve full coverage of medium and long-term supply and demand contracts. The national development and Reform Commission’s special verification on the signing and performance of medium and long-term coal contracts is to further cooperate with the implementation of the notice on further improving the formation mechanism of coal market price, supervise coal enterprises and thermal power generation enterprises to implement medium and long-term coal trading contracts, and stabilize the fluctuation of coal market price. Considering that thermal power generation is still the main form of power generation in China, the implementation of medium and long-term coal contracts can ensure the stable and reliable supply of coal for power generation and heating, avoid the impact of large fluctuations in coal prices on the performance of thermal power enterprises, and ensure the stable operation of the power market.
The national development and Reform Commission issued the key tasks for the development of new urbanization and urban-rural integration in 2022. The task proposes to accelerate the construction of new urbanization and improve the level of Urban Governance: 1) carry out aging renovation of gas pipelines; 2) Improve flood control facilities; 3) Promote green and low-carbon development; 4) Promote the extension of urban infrastructure to rural areas. This will help: 1) promote the construction of gas pipelines and water supply and drainage projects in cities and towns and surrounding villages, reduce the impact of floods and waterlogging, improve the quality of residents’ gas and water consumption, and drive the demand for gas and water; 2) Further popularize the classification of domestic waste, promote the comprehensive utilization of bulk solid waste, standardize the hazardous waste disposal market, accelerate the elimination of backward production capacity and improve the industry concentration; 3) Effectively connect with rural vibration, drive the overall coordinated development of the region, improve rural infrastructure construction and release potential market demand.
Investment suggestions: by implementing the medium and long-term contracts for coal trading, ensure that the coal price operates within a reasonable range, improve the transmission mechanism of coal price and electricity price, and benefit the medium and long-term development of thermal power enterprises. In the electric power industry, China Yangtze Power Co.Ltd(600900) , China National Nuclear Power Co.Ltd(601985) , Shenergy Company Limited(600642) , thermal power , and China Three Gorges Renewables (Group) Co.Ltd(600905) , green power , are recommended to pay attention to Huaneng Lancang River Hydropower Inc(600025) , Sdic Power Holdings Co.Ltd(600886) , Cgn Power Co.Ltd(003816) . Promoting the construction of new urbanization and connecting the Rural Revitalization Strategy is expected to accelerate the construction of gas pipeline and water supply and drainage pipe network system, improve the collection and transportation of urban and rural waste, and improve the resource utilization level of solid waste. In the environmental protection industry, Beijing Geoenviron Engineering & Technology Inc(603588) , a comprehensive service provider of environmental remediation and solid waste resource recovery, is recommended to pay attention to Grandblue Environment Co.Ltd(600323) , a comprehensive service provider of solid waste treatment, urban energy and water supply and drainage.
Risk tip: declining demand; Price reduction; Rising costs; Reduction of precipitation; Local financial pressure; Policy promotion lags behind.
