Events
On May 17, the national development and Reform Commission held a press conference in May. It was pointed out at the meeting that the national development and Reform Commission will closely monitor the changes in coal market prices, immediately remind and interview those found to exceed the reasonable range, and take means such as investigation and notification when necessary to guide coal prices to return to the reasonable range. In this regard, we make the following comments.
Comments
Coal prices continued to run at a high level, and energy supply continued to receive attention. Since 2022, the price of thermal coal has been at a high level. The recent intensive deployment at the central level requires to ensure the normal supply of energy and take multiple measures to alleviate the capital pressure of enterprises. Closely supervise from the mining end, enterprise end and transaction end. At present, the coal industry is characterized by high profitability, strong demand and unstable supply. There are corresponding investment opportunities under the intervention of policy.
There is uncertainty in overseas supply, and the demand side will continue to make efforts. In April, China’s overseas coal import data exceeded expectations. The coal import volume was 23.55 million tons, an increase of 8% year-on-year and 43% month on month. From January to April, China imported 75.41 million tons of coal, a year-on-year decrease of 16%, 8 percentage points lower than that in the previous March. It can be seen from the data that China’s coal imports increased month on month in April. There are two main reasons. Firstly, there is still a demand for imported coal in the current market. Secondly, the uncertainty of international coal supply caused by the conflict between Russia and Ukraine has increased, and some end users in China have increased their procurement at the transaction level. As the weather turns hot and enters summer, the demand for coal for power plants will increase. After May, however, there is still great uncertainty due to the Russian Ukrainian Chong incident. At the same time, the procurement intensity in April is relatively large. In addition, China continues to emphasize that under the guarantee of supply and stable price, the superposition of epidemic diseases accounts for the impact of war, and the low efficiency of Russian coal transportation, the possibility of increasing overseas supply is small, while the superposition of stable growth of resumption of work and production has a large demand for coal. Under the structural problem of market supply and demand, It will continue to support the high operation of coal prices.
Profit support industry valuation center is expected to rise. The coal sector has outperformed the CSI 300 index by nearly 40% this year. The core reason is the strong support of the profit side. According to the first quarter report, the profits of coal enterprises are considerable, especially the net profit increase of some leading enterprises is much higher than the market expectation. According to statistics, as of 2022q1, the total market value of coal shares held by public funds was RMB 27.684 billion, an increase of 209.33% compared with RMB 8.95 billion in 2021q4. The market heat and capital preference of the coal sector have been quite different from those in the past few years, and the value cognition of institutional investors for the coal sector is also changing. In addition, the recent increasing support for the energy supply industry also proves that the current attention to coal is increasing. With the support of profit side and supply and demand side, the industry valuation center is expected to rise. It is suggested to pay attention to relevant companies integrating mining and power generation business. Related objects: China Shenhua Energy Company Limited(601088) , Yankuang energy, Shanxi Coking Coal Energy Group Co.Ltd(000983) .
Risk warning: the epidemic situation fluctuates beyond expectations; Downstream demand was lower than expected.
