Review of power sector in the whole year and 2022q1:
1) market review: outperform the market. In 2021, the overall rise and fall of the power sector was 58.27%, outperforming the market and ranking fourth among the A-share sectors. In the first four months of 2022, the rise and fall of the power sector was – 15.79%, outperforming the market and ranking 17th among the A-share sectors.
2) performance review: in 2021, the revenue of power sector increased by 23.7% year-on-year, cagr2 = 10.5%; In 2022q1, the revenue increased by 26.8% year-on-year, of which the thermal power sector increased by 28% year-on-year. In 2021, the net profit attributable to the parent company of the power sector decreased by 81% year-on-year, mainly due to the loss of 41.6 billion yuan in the thermal power sector. The performance of the thermal power sector improved in 2022q1, driving the net profit attributable to the parent company of the power sector to 14.7 billion yuan (2021q4 was – 39.2 billion yuan).
Thermal power: the sharp rise in coal price dragged down the performance, and the loss turned into profit in 2022q1.
1) industry: in 2021, the revenue of thermal power sector increased by 26.0% year-on-year, cagr2 = 10.7%; 2022q1 revenue increased by 28.5% year-on-year. In 2021, the thermal power sector suffered a loss of 41.6 billion yuan in the whole year against the background of the sharp rise in coal-fired costs. If the impairment loss is not considered, the loss will narrow to 29.2 billion yuan. In 2022q1, under the background of liberalizing the increase of coal-fired electricity price and tightening the supervision of coal price, the net profit attributable to the parent company of thermal power sector was 1.13 billion yuan, 2021q4 was – 43.7 billion yuan (excluding impairment loss), and the loss turned into profit month on month. Affected by large losses and 126% year-on-year increase in inventories, the operating net cash flow of thermal power sector decreased significantly in 2021, and the operating net cash flow / income was only 4%, far lower than 23.3% in 2020; The asset liability ratio increased by 6.5pct to 69.3% year on year. However, the financial expense rate is still relatively stable. In the past three quarters, the financial expense rate of the industry has remained at 4.3% – 4.4%, which we believe is mainly due to the decline of capital cost.
2) individual stocks: on the profit side, the subject matter of thermal power industry basically suffered losses, among which the national large-scale thermal power enterprises suffered the largest losses. From the perspective of kWh net profit, the kWh net profit of national large thermal power enterprises and coastal local thermal power enterprises is higher than that of inland local thermal power enterprises. There may be two reasons. First, the coal-fired on grid price in coastal areas is generally higher than that in inland areas. Second, the coastal areas are economically developed and have a higher degree of marketization. The implementation of the policy of liberalizing the increase of coal-fired price to 20% is faster. From the specific subject matter, the net profit of Gd Power Development Co.Ltd(600795) thermal power division in 2021 is -0.011 yuan / kWh, which has a strong profitability in the subject matter of thermal power.
Green power: centralized power station operators performed strongly, and Q1 wind conditions decreased year-on-year, affecting their performance
1) industry: on the revenue side, driven by the rapid growth of installed capacity in 2021, the industry revenue of green power sector in 2021 increased by 30.6% year-on-year, and the net profit attributable to the parent company increased by 41.7% year-on-year; In 2022q1, the revenue increased by 22.1% year-on-year, and the net profit attributable to the parent company increased by 23.1% year-on-year. On the profit side, in 2021, the gross profit margin of the green power sector decreased by 2.1pct year-on-year. If Jinko Power Technology Co.Ltd(601778) , the loss of CGN new energy gas power business and Cecep Solar Energy Co.Ltd(000591) , which is greatly affected by the battery business, are excluded, the gross profit margin of the green power sector will be 40.7%, a year-on-year decrease of 1.0pct. The gross profit margin of 2022q1 green power sector was 34.0%, down 7.9pct year-on-year, mainly due to the decline in the available hours of wind power business.
2) individual stocks: in 2021, except that the revenue growth of distributed photovoltaic enterprises Jinko Power Technology Co.Ltd(601778) , Zhejiang Sunoren Solar Technology Co.Ltd(603105) is 0-10%, the revenue growth of green power targets mainly engaged in centralized wind power / photovoltaic power plant operation is basically higher than 20%.
Hydropower: the profit of the industry is stable, and the incoming water turns to abundant, driving the recovery of revenue
1) industry: in 2021, the operating revenue of hydropower sector was 153.9 billion yuan, with a year-on-year increase of 5.36%, and the net profit was 41.560 billion yuan, with a year-on-year decrease of 7.45%; In 2022, the water from Q1 key river basins was generally abundant, and the superimposed hydropower price continued to rise. The sector achieved a revenue of 34.974 billion yuan, a significant year-on-year increase of 18.38%, and a net profit of 6.874 billion yuan, a year-on-year increase of 6.29%.
2) individual stocks: in 2021, only Huaneng Lancang River Hydropower Inc(600025) achieved positive net profit growth among comparable companies. The reason is that the company’s comprehensive electricity price increased significantly in 2021 to offset the impact of power decline. The median year-on-year growth rate of net profit in hydropower sector is – 4.81%. Q1 performance generally recovered in 2022.
Investment suggestion: in the industry, under the strong regulatory constraints of coal production and supply and coal price, the performance of thermal power enterprises in the second quarter is expected to improve and maintain the “recommended” rating of the industry. In terms of individual stocks, it is suggested to pay attention to the thermal power targets that are expected to improve profits, such as Huaneng Power International Inc(600011) , Gd Power Development Co.Ltd(600795) , Huadian Power International Corporation Limited(600027) , Shanghai Electric Power Co.Ltd(600021) , Fujian Funeng Co.Ltd(600483) , China Resources Power, Guangdong Electric Power Development Co.Ltd(000539) , Shenergy Company Limited(600642) , Datang International Power Generation Co.Ltd(601991) , and China power; High quality targets of green power China Three Gorges Renewables (Group) Co.Ltd(600905) , Longyuan Power, Tianjin Guangyu Development Co.Ltd(000537) , Jilin Electric Power Co.Ltd(000875) , Nyocor Co.Ltd(600821) , Cecep Wind-Power Corporation(601016) , Cecep Solar Energy Co.Ltd(000591) , Zhongmin Energy Co.Ltd(600163) , CGN new energy; Nuclear power operation leader China National Nuclear Power Co.Ltd(601985) ; High quality water and electricity targets China Yangtze Power Co.Ltd(600900) , Sdic Power Holdings Co.Ltd(600886) , Sichuan Chuantou Energy Co.Ltd(600674) , Huaneng Lancang River Hydropower Inc(600025) .
Risk warning: the demand for electricity is declining; The installed capacity is less than expected; The incoming water is dry; Focus on the improvement of the company’s performance as expected; Risk of policy change; Electricity prices fell sharply; Coal prices continued to rise sharply.
