One week market review: this week, the CSI 300 index fell 0.99%, the public utilities index fell 2.81%, the environmental protection index fell 5.20%, and the weekly relative returns were – 1.82% and – 4.20% respectively. Among the 31 primary industry categories of Shenwan, public utilities and environmental protection ranked 16th and 26th. Among them, among the sub sectors of the power sector, thermal power decreased by 1.96%; Hydropower rose by 0.26%, and new energy power generation fell by 9.16%; Water sector fell 2.58%; Gas sector fell 0.89%; The testing service sector rose 1.59%.
Comments on changes: the environmental protection sector Tongxing Environmental Protection Technology Co.Ltd(003027) followed the atmospheric governance sub sector, up 24.64%. The Huadian Energy Company Limited(600726) announcement of accelerating transformation and green upgrading in thermal power sector, combined with the expectation of state-owned enterprise reform, rose 10.53%. Hydropower sector Hunan Chendian International Development Co.Ltd(600969) announced that the wholly-owned subsidiary received a tax rebate of 55.644 million yuan for water diversion projects, up 7.91%.
Important event: the National Energy Administration released the electricity consumption data of the whole society in March. In March, China’s electricity consumption continued to grow, reaching 694.4 billion kwh, a year-on-year increase of 3.5%. From January to March, the total electricity consumption of the whole society was 2042.3 billion kwh, a year-on-year increase of 5.0%.
Special research: in March, the growth rate of power consumption in high energy consumption industry was at a low level in recent three years. According to the industry sector, in March 2022, the power consumption of ferrous metal smelting industry was 54 billion kwh, with a year-on-year increase of 2.0%, and the growth rate was 24.2 percentage points lower than that of the same period of last year. The growth rate was at a low position in recent three years. The power consumption of non-ferrous metal smelting industry was 60.6 billion kwh, with a year-on-year increase of 3.5%, and the growth rate was 7.9 percentage points lower than that of the same period of last year. The growth rate was at a low position in recent three years. The electricity consumption of the building materials industry was 32 billion kwh, a year-on-year increase of 9.4%, and the growth rate was 31.5 percentage points lower than that of the same period of the previous year. The growth rate was at a low position in recent three years. The power consumption of the chemical industry was 45.4 billion kwh, a year-on-year increase of 3.0%, and the growth rate was 10.7 percentage points lower than that of the same period of the previous year. The growth rate was at a high position in recent three years. Thermal power may meet the turning point of profit in the off-season.
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” – last year’s low-cost wind turbine and rush to install sea breeze ensured this year’s performance. 2. The policy promoted 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. Recommend good cash flow, “nuclear power and new energy” two wheel drive China National Nuclear Power Co.Ltd(601985) ; 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 China Three Gorges Renewables (Group) Co.Ltd(600905) , Longyuan Power with capital cost and resource advantages; 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.
