This week's topic
After the collision of Daqin Railway Co.Ltd(601006) coal special line on April 14, the coal price rebounded upward, but the Wande coal industry index did not rise but fell. Therefore, we judge that the coal market has reached a phased peak, and the high risk aversion of funds needs to be released. This week we will share the logic of thermal power rebound caused by the decline in coal prices.
Core view
Coal prices are expected to continue to decline, and the coal market has reached a phased peak
In March, winter heating was gradually ended in various places, and the demand for coal entered the traditional off-season. With the policy overweight of the national development and Reform Commission and the impact of regional epidemic, the closing price of Qinhuangdao Power end coal began to enter the downward channel after reaching a phased peak (1664 yuan / ton) on March 11. The Wande coal industry index followed the short decline of the market, but walked out of the independent market rising all the way.
After the collision of Daqin Railway Co.Ltd(601006) coal special line on April 14, the coal price rebounded upward, but the Wande coal industry index did not rise but fell. Therefore, we judge that this round of coal market has reached a phased peak, and the high risk aversion of funds in the coal industry needs to be released.
Thermal power hedges against the decline of coal price and the logic switching of coal and electricity, and the thermal power industry is expected to rebound
With the coal price entering the downward channel, the cost pressure of thermal power generation is expected to ease, driving the improvement of profitability. At the same time, the market-oriented reform of electricity price continued to advance, the high price of electricity in many places rose, and some power generation costs were channeled downstream. Therefore, we expect Q2 thermal power industry to usher in marginal improvement.
In the context of falling coal prices, we believe that the thermal power industry is expected to become an investment variety to hedge against the decline of coal prices. The logic switching of coal and electricity is expected to promote the rebound of the thermal power industry.
Investment advice
after the collision of Daqin Railway Co.Ltd(601006) coal special line, Wande coal industry index did not rise but fell. Therefore, we judge that the coal market has reached a phased peak. On April 20, the coal price returned to the decline channel, driving the marginal improvement of the performance of the thermal power industry. We believe that the thermal power industry, as a hedge investment variety for the decline of coal price, is expected to usher in a rebound market. In terms of specific targets, the proposal of thermal power transformation to new energy targets focuses on [ Huaneng Power International Inc(600011) (a + H)] [ Shanghai Electric Power Co.Ltd(600021) ] [ Fujian Funeng Co.Ltd(600483) ] [China Resources Power] [ Huadian Power International Corporation Limited(600027) (a + H)].
Risk tips: the policy promotion is less than expected, the power demand is less than expected, the risk of electricity price reduction, the risk of coal price fluctuation, the epidemic rebound than expected, etc.
