Core view
One week market review: this week, the CSI 300 index rose 2.43%, the power and utility index rose 0.92%, and the weekly relative yield was – 1.51%. In the Shenwan industry category, the increase of public utilities ranked 15th among 28 industries. Among them, the environmental protection engineering and service sector rose 0.66%; Among the sub sectors of the power sector, thermal power rose by 0.95%; Hydropower rose by 3.51%, and new energy power generation rose by 0.15%; Water sector rose 3.18%; Gas sector rose 0.95%; Testing services sector rose 0.49%.
Comments on changes: the environmental protection sector Xinjiang Guotong Pipeline Co.Ltd(002205) increased by 28.35% stimulated by the expected completion of water conservancy investment of 800 billion in 2022. The power sector Shandong Xinneng Taishan Power Generation Co.Ltd(000720) benefited from the overall sharp rise under the expectation of the reversal of the plight of the real estate sector, up 17.32%. Most of the water sector rose stimulated by the investment in water conservancy in 2022, Tianjin Capital Environmental Protection Group Company Limited(600874) up 10.25%. Natural gas sector Enn Natural Gas Co.Ltd(600803) 2021 net profit attributable to parent increased by 95% year-on-year and continued to rise by 8.55% this week. In terms of Hong Kong stocks, most of the shares in the power industry rose, and Longyuan Power rose 18.72%.
Important event: the guidance on energy work in 2022 was released. It is planned that the total energy production in China will reach 4.41 billion tons of standard coal in 2022, and the proportion of non fossil energy in the total consumption will increase to about 17.3%.
Special research: on March 29, 2022, the National Energy Administration issued the guiding opinions on energy work in 2022, which planned the energy development goal in 2022. The total energy production in China reached about 4.41 billion tons of standard coal, the installed power capacity reached about 2.6 billion kw, and the power generation reached about 907 trillion kwh. The proportion of non fossil energy in the total energy consumption has increased to about 17.3%, and the proportion of wind power and photovoltaic power generation in the power consumption of the whole society has reached about 12.2%.
Investment strategy: Public Utilities: 1. The reform of electricity marketization is promoted, and the electricity price can better reflect the value of supply and demand, cost and environment. The construction cost of new energy continues to decline. New energy operators have “triple” certainty, and the growth rate of “quantity” – scenery installation 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 Huaneng Power International Inc(600011) etc; New energy operation leader with capital cost and resource advantages China Three Gorges Renewables (Group) Co.Ltd(600905) ; It is recommended to have 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. Recommend recycled paper as the leading Zhejiang Rongsheng Environmental Protection Paper Joint Stock Co.Ltd(603165) .
Risk warning: 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.
