Green power:
The biggest loss in the history of coal power industry is expected to turn around in 2022q2. Since China allowed the market-oriented electricity price of coal power to rise by no more than 20% in October 2021, the electricity price has risen rapidly in the fourth quarter, and the average on grid electricity price of leading companies generally increased by 20% in the first quarter of 2022. However, the decline rate of coal price was lower than expected. From the actual situation in the first quarter, only about 40% of the coal price of leading power enterprises met the price range required by the national development and Reform Commission. Under the pressure of guaranteed supply, thermal power enterprises, regardless of costs, gave full play to the mission of state-owned enterprises in the fourth quarter of 2021, ushered in the largest loss since listing, and some companies suffered cash flow losses.
In the first quarter of 2022, the profitability of coal power improved significantly, basically maintained at “a slight loss in profit and loss balance or a slight surplus in profit and loss balance”
Range of. At the end of April, the national development and Reform Commission once again issued the judgment standard of civilized driving up coal prices. We analyzed the energy security situation and the reality of the coal power industry. The wording of the national development and Reform Commission is much stronger than before. It is expected that with the improvement of the performance rate of the coal long-term association in the second quarter, the profitability of the coal power sector will be substantially improved. Under the new situation of power and coal supply and demand, we analyze that the cost control of China’s power, Gd Power Development Co.Ltd(600795) , Inner Mongolia Mengdian Huaneng Thermal Power Corporation Limited(600863) and other power plants with high proportion of Kengkou power plant is better.
In 2021, the historical loss of thermal power depends on misfortunes and blessings, and the enterprises with low asset liability ratio benefit as a whole. On the one hand, according to the rules of China’s tax law, the current year’s losses can be deducted from income tax in the next five years. Therefore, if facing the future and calculated at the income tax rate of 25%, the historical loss of thermal power in 2021 will bring income tax relief of more than 10 billion yuan for the whole sector in the next five years. However, on the other hand, the loss led to the decline of the scale of net assets and the increase of asset liability ratio, which limited the ability of enterprises to increase leverage to a certain extent, and then restricted the speed of new energy transformation.
On the whole, enterprises whose asset liability ratio is lower than or close to the 70% assessment red line of SASAC benefit as a whole, including Inner Mongolia Mengdian Huaneng Thermal Power Corporation Limited(600863) , China Resources Power, China power, Gd Power Development Co.Ltd(600795) .
The green power sector rose at the beginning of the red sun, and the growth rate of leading companies led. Affected by factors such as rush installation before parity at the end of 2020, installed capacity growth in 2021 and good wind conditions, the new energy power generation capacity of green power company and thermal power transformation company will increase significantly in 2021, and the growth rate of leading companies will generally reach 40% – 50%. However, there was obvious differentiation among different companies in the first quarter of 2022, and the growth rate of second tier companies generally fell sharply. The year-on-year growth rate of first-line leader China Three Gorges Renewables (Group) Co.Ltd(600905) , China power and new energy power generation in the first quarter of 2022 still reached 46.6% and 51.6% respectively, leading the whole new energy sector.
We believe that the strong will always be strong and the preferred leader is an important investment criterion for the new energy operation sector. Different from the upstream manufacturing link, the operation link cannot overtake on the curve through technological progress, and there will be no phenomenon that giants are difficult to turn around in the face of technological changes; On the contrary, scale is the biggest advantage. On the one hand, the existing scale already contains the resource reserves and group strength behind it. On the other hand, large-scale enterprises have advantages in obtaining project resources, playing games with upstream equipment procurement and obtaining low interest loans from banks. Small and medium-sized enterprises may achieve high growth rate in a short time, but it is difficult to continue to take the lead in the competition of Changpo heavy snow track.
Hydropower performance is stable as a whole, and China National Nuclear Power Co.Ltd(601985) performance is much higher than expected. Affected by factors such as dry incoming water and water storage during the operation period of upstream power stations, the electricity consumption of hydropower Longfa decreased slightly in 2021, but China Yangtze Power Co.Ltd(600900) achieved flat performance through factors such as increased investment income, reduced financial expenses and reduced depreciation. Huaneng Lancang River Hydropower Inc(600025) benefited from the increase of market-oriented electricity price in Yunnan Province, and achieved contrarian growth under the drag of the decline of power generation. In the first quarter of 2022, the water inflow from southern China improved, and the overall performance of hydropower companies ushered in a good start China National Nuclear Power Co.Ltd(601985) 2021 performance increased by 34.1% year-on-year, benefiting from the rise of market-oriented electricity price. In the first quarter of 2022, it increased by 61.4% year-on-year, much higher than the 30% – 40% increase expected by the market. Under the background of low-carbon transformation, nuclear power + new energy deserves attention.
At present, China is highly optimistic about the leading company of thermal power transformation into new energy and the comprehensive energy sector. The core recommended combinations are Gd Power Development Co.Ltd(600795) , China power, Chongqing Three Gorges Water Conservancy And Electric Power Co.Ltd(600116) and Inner Mongolia Mengdian Huaneng Thermal Power Corporation Limited(600863) .
Environmental protection:
The national 14th five year plan proposes to comprehensively improve the level of environmental infrastructure. The central financial and Economic Commission once again emphasizes the construction of a modern infrastructure system. The construction of urban sewage pipe network is one of the strong weaknesses. We believe that according to the guidelines and requirements of the “14th five year plan”, improving the level of environmental infrastructure and improving the modern environmental governance system are the key, among which the urban sewage pipe network is the top priority. In the future, we will promote the standardized development of the cooperation mode between the government and social capital, guide social capital to participate in the investment and operation of municipal facilities, and improve the prosperity of the water governance sector
; 2) Pure new energy companies: China Three Gorges Renewables (Group) Co.Ltd(600905) , Longyuan Power, China Southern Power Grid Energy Efficiency&Clean Energy Co.Ltd(003035) , Jinko Power Technology Co.Ltd(601778) ; 3) Hydropower and nuclear power: China Yangtze Power Co.Ltd(600900) , Huaneng Lancang River Hydropower Inc(600025) , Sdic Power Holdings Co.Ltd(600886) , Sichuan Chuantou Energy Co.Ltd(600674) , Guizhou Qianyuan Power Co.Ltd(002039) , China National Nuclear Power Co.Ltd(601985) , Cgn Power Co.Ltd(003816) ; 4) Power grid and comprehensive energy: Chongqing Three Gorges Water Conservancy And Electric Power Co.Ltd(600116) , State Grid Information&Communication Co.Ltd(600131) , Chongqing Fuling Electric Power Industrial Co.Ltd(600452) .
Key targets of environmental protection: hydrogen energy is the first Moon Environment Technology Co.Ltd(000811) ; Biodiesel is the first absolute leader in China Longyan Zhuoyue New Energy Co.Ltd(688196) ; Recommendations for hazardous waste recycling Beijing Geoenviron Engineering & Technology Inc(603588) , Zhefu Holding Group Co.Ltd(002266) ; Domestic waste incineration recommends Everbright environment, Grandblue Environment Co.Ltd(600323) , Zhejiang Weiming Environment Protection Co.Ltd(603568) . At the same time, our recent in-depth report combs the Three Gorges group’s lead in the great protection of the Yangtze River and the trillion investment promotes the improvement of the industrial chain. It recommends Fujian Superpipe Co.Ltd(300198) , Csd Water Service Co.Ltd(603903) , and it is recommended to pay attention to Vontron Technology Co.Ltd(000920) , Lihe Technology (Hunan) Co.Ltd(300800)
Risk warning: the change of coal electricity price is less than expected
