Up nearly 12% this year! How long can the market of this sector last? Here comes the institutional judgment

From the stage low of 213128 to the seven-year high of 334203, the market performance of A-share coal sector has been unparalleled since November 2021. Despite the correction, the coal sector still has an increase of nearly 12% this year.

In the view of industry institutions, higher coal prices and good basic orientation have jointly promoted the upward movement of the coal sector. Factors such as the subsequent easing of the epidemic and the improvement of downstream demand are also expected to make the prices of coke, coking coal and thermal coal have room or power to rise. Some institutions said they were optimistic about the current coal sector and suggested paying attention to those with stable performance and high scores.

multi factor resonance boosts the market higher

On April 27, the coal industry sector (Shenwan industry) rose with the sharp rebound of the A-share market, closing up 4.10%. Since the beginning of the year, the cumulative increase of the coal sector has reached 11.94%, surpassing the performance of 30 other Shenwan industries. It is also the only sector that has achieved positive income this year.

For a long time, the current round of rising market in the coal sector has maintained a rising trend for nearly one year from July 2020 to September 2021. At that time, many cyclical products sectors, including coal, have performed well, and the cyclical stock market has become the target of market funds; In September 2021, the coal sector ushered in a two-month downward trend, and then the sector rose again, hitting a new high in more than seven years on April 15, 2022.

China Securities News reporter combed the institutional point of view and found that the continuous rise in prices is one of the main drivers to promote the prosperity of the coal industry. The conflict between Russia and Ukraine triggered the announcement of banning the import of Russian coal in Europe and the United States, which further exacerbated the rise of energy prices worldwide. Data show that as of April 27, the main contract prices of coke, coking coal and thermal coal futures have increased by more than 21% since the beginning of the year.

According to the data, among the coal listed companies that have disclosed the annual report of 2021, the net profit attributable to the parent company has increased year-on-year, of which more than half have increased by more than 100% In Beijing Haohua Energy Resource Co.Ltd(601101) 2021, the net profit attributable to the parent company increased by over 4100% year-on-year, in Shaanxi Heimao Coking Co.Ltd(601015) 2021, the net profit attributable to the parent company increased by over 670% year-on-year, and in Shanxi Lanhua Sci-Tech Venture Co.Ltd(600123) 2021, the net profit attributable to the parent company increased by nearly 528% year-on-year.

According to the data disclosed by the National Bureau of statistics on April 27, the energy supply protection measures were effectively promoted. The production of coal and other energy products increased rapidly in the first quarter of this year. The PPI of the coal mining and beneficiation industry expanded to 53.9% year-on-year in March, driving the industry profit to increase by 1.89 times in the first quarter.

focus on configuration opportunities

Since last week, the coal sector has fallen with the overall correction of a shares. However, from the perspective of valuation, as of April 27, the price earnings ratio (TTM) of the coal sector was still at the quantile of 65.49% in the past five years, and the main contract price of thermal coal futures has also decreased slightly since March. Most institutions are still optimistic about the future fundamentals and market trend of the coal sector.

In the view of Guosheng securities, it is difficult for Daqin line to maintain full capacity in a short time, and the subsequent imported coal may also be significantly reduced. If the low inventory problem along the coast cannot be solved, even in the off-season, the price of power coal will rise again after the periodic decline; In terms of coking coal, there is still room for improvement in downstream demand in the short term. With the superposition of low inventory of coking steel enterprises, the downstream has sufficient power to actively replenish the inventory, and the price will rise strongly again; In terms of coke, as the epidemic eased, there was room for prices to rise under the recovery of molten iron production in steel mills.

From the perspective of public fund positions, the increase of positions in the coal sector in the first quarter of this year also confirms the positive value of institutions on the sector to a certain extent. According to the statistics of Minsheng securities, as of the end of the first quarter of this year, the total market value of coal shares held by public funds was 27.684 billion yuan, an increase of 209.33% compared with 8.95 billion yuan at the end of the fourth quarter of 2021. In terms of proportion, the chips of public funds in the first quarter focused on the leader of thermal coal, and the position of coking coal increased. According to Minsheng securities, in the later stage, with the effective control of the epidemic and the stimulation of real estate infrastructure investment, the subsequent price of thermal coal is expected to rise, and the demand for coking coal is also expected to be boosted.

Cinda Securities pointed out that at this stage, the industry fundamentals, the underlying logic of the policy and the direct effect are good, and the valuation of the coal sector is repaired and improved. Considering the certainty of high performance growth in the first half of this year, it is a reasonable stage for bargain hunting to allocate the coal sector. Continue to look at the coal sector, and it is suggested to pay attention to the allocation opportunities of coal.

For the selection of specific targets, institutions prefer those with stable performance and high scores.

Kaiyuan Securities pointed out that recently, the performance of many coal enterprises in the first quarter exceeded expectations, and the annualized valuation level of most enterprises was only four or five times, with a high margin of safety. In addition, the corresponding policies for steady growth are expected to continue to be introduced, and the demand is expected to remain good. In terms of configuration, it is recommended to pay attention to the objects with stable performance and high dividend benefit. In addition, the subjects with growth expectations, Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) transformation and debt restructuring also deserve attention.

It is worth noting that since May 1, the notice on further improving the coal market price formation mechanism (fgjg [2022] No. 303) issued by the national development and Reform Commission in February will be officially implemented. The notice defines the reasonable range of medium and long-term transaction price of coal (thermal coal). The national development and Reform Commission also made it clear that it will guide coal prices to operate within a reasonable range to ensure safe and stable energy supply.

Open source Securities believes that the short-term high performance of coal enterprises has been gradually recognized by the market, and the stable release of medium and long-term performance is the key factor to guide the remodeling of coal stock valuation. The investment logic of the coal sector may mainly focus on the two main lines of "steady growth" and "transformation": benefit from the infrastructure real estate chain, benefit the coal coke steel industry chain, and the peak of steel carbon will delay the demand for coking coal; In the context of carbon neutrality, the willingness of coal enterprises to increase production capacity has decreased significantly, and the endogenous growth is insufficient, but the epitaxial growth will become the mainstream, and the high profitability of coal enterprises have the ability to make transformation.

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