Benefiting from strong downstream demand and sharp rise in overseas coal prices, coal companies experienced high commodity coal prices in the first quarter. Despite the strengthening of supply guarantee in the first quarter, the demand for thermal power heating in the downstream and the growth of coal power demand brought about by the resumption of work and production of industrial enterprises led to the increase of power coal demand, superimposed with the rise of overseas coal prices, and China’s coal prices fluctuated upward. From January to February 2022, the national coal output was 687 million tons, an increase of about 11% year-on-year. According to the data of the Bureau of statistics, the power generation from January to February 2022 increased by 9% year-on-year in 2021 and 22% year-on-year in 2020. In the first quarter of 2022, the average price of Bohai Rim thermal coal index was 743 yuan / ton, with a year-on-year increase of 25%. The average spot price of Newcastle NEWC thermal coal was 240 US dollars / ton, with a year-on-year increase of 168%. The price of thermal coal was relatively strong.
In the first quarter, the price of coking coal fluctuated upward, and the coke price is expected to be adjusted at a high level. The increment of coking coal supply is limited, and the customs clearance of Mongolian coking coal import is at a low level due to the impact of global special events. In the first quarter of 2022, the Winter Olympic and Paralympic Games and the two sessions were held, the production of coke steel enterprises was limited, and the resumption of work and production in the later stage was carried out successively, driving the demand for replenishment. The tight supply and demand pattern continues, and the price of coking coal continues to rise. In the first quarter of 2022, the average price of Taiyuan Gujiao No. 2 coking coal was 1308 yuan / ton, a year-on-year increase of 33%. In the first quarter of 2022, the average price of Tianjin Port Co.Ltd(600717) quasi primary coke was 3182 yuan / ton, up 17% year-on-year. With the relaxation of downstream control and the recovery of demand, it is expected to drive the centralized growth of coal demand, and the overall orientation is basically good.
We expect the performance of key companies in the coal industry in the first quarter of 2022 to be as follows:
There are four companies with better performance than expected: Yankuang energy (Q1 EPS 1.33, yoy 193.17% in 2022; the company benefited from the rise of coal prices outside China, the increase of coal production capacity due to the superposition of external mergers and acquisitions and endogenous growth, the high prospect of coal chemical industry and the substantial increase of performance), Pingdingshan Tianan Coal Mining Co.Ltd(601666) (07321219%; the high resource endowment of coking coal and the tight pattern of supply and demand boosted the rise of coal prices) Shanxi Coal International Energy Group Co.Ltd(600546) (06530157%; the company focuses on spot sales and has strong performance flexibility), Jizhong Energy Resources Co.Ltd(000937) (02034617%; the monthly pricing mechanism of the long-term association allows flexible sales according to the market).
There are 17 companies whose performance basically meets the expectation: China Shenhua Energy Company Limited(601088) (0.79,34.94%, the industry leader benefits from the upward movement of the long-term association center and the steady operation of coal and electricity enterprises), Shaanxi Coal Industry Company Limited(601225) (0.61,75.99%; high spot proportion and high flexibility benefit from the simultaneous increase of volume and price), China Coal Energy Company Limited(601898) (0.42,58.37%; clean and efficient utilization of coal, giving play to the advantage of “coal electricity chemical” Circular Economy) Guanghui Energy Co.Ltd(600256) (03115018%; product prices rose sharply, and production capacity was released on schedule), Shanxi Coking Coal Energy Group Co.Ltd(000983) (0.33, 46.72%; continuous injection of high-quality assets, and production capacity growth is expected), Shanxi Lu’An Environmental Energydev.Co.Ltd(601699) (0.67, 26.00%; injection coal market leader, and high coal prices boosted performance), Shanxi Coking Co.Ltd(600740) (0.24, 37.57%; global economic recovery, and downstream demand supported the high consolidation of coke prices) Guizhou Panjiang Refined Coal Co.Ltd(600395) (0.33, 164.24%; the technological transformation of the mine is carried out in an orderly manner, and the high-quality production capacity is gradually released), power investment energy (0.85, 60.98%; the layout of the “coal electricity aluminum” integrated industrial chain has obvious cost advantages and remarkable performance elasticity), Huaibei Mining Holdings Co.Ltd(600985) (0.65, 34.84%; the rise of volume and price drives the release of the company’s performance), Wintime Energy Co.Ltd(600157) (0.02, 60.53%; the coal electricity joint venture is mutually beneficial and complementary, debt resolution and stable operation) , the capacity of Banji coal mine has been released one after another Shanxi Lanhua Sci-Tech Venture Co.Ltd(600123) (07929656%; enjoy the upward cycle dividend of the industry, effective cost control and substantial profit thickening).
There is one company lower than expected: Shanghai Datun Energy Resources Co.Ltd(600508) (0.30,13.62%).
Investment analysis opinion: steady growth is expected, and the recovery of downstream demand will help the coal industry maintain a high outlook. We mainly recommend the stable operation of China Shenhua Energy Company Limited(601088) , the target of high dividend and high dividend, Yankuang energy, the target of high dividend undervalued transformation, and Guanghui Energy Co.Ltd(600256) , the target of high growth undervalued transformation.
Risk tip: the strength of supply guarantee superimposed on the strength of price control policy exceeded expectations, and the coal price continued to fall.
