Core view
The sluggish demand leads to the weakening of thermal power generation, and the supply and demand of electric coal is expected to improve
In April, the output of raw coal was 360 million tons, with a year-on-year increase of 10.7%, maintaining a high growth rate. In terms of imported coal, it increased from a decline to 23.55 million tons in April, an increase of 8.4% year-on-year and a decrease of 39.6% last month.
Since this year, the average daily power generation has continued to decline. In April, the power generation was 608.6 billion kwh, a year-on-year decrease of 4.3% and an increase of 0.2% last month. Among them, the average daily power generation of thermal power was 13.4 billion kwh, a year-on-year decrease of 11.8%, an increase of 6.1 percentage points over the previous month.
In April, the electricity consumption of the whole society was 636.2 billion kwh. The year-on-year increase in March and April began to narrow rapidly from 18.4% in February, and the electricity consumption in April was the same as that in the same period last year. Among them, the power consumption of the secondary industry was 446.8 billion kwh, a year-on-year increase narrowed from 16.7% in February to 0.4% in April.
Under the new normal of coal price and electricity price, thermal power assets are expected to usher in a bottom reversal
The fundamentals of thermal power are at a dark time, and coal prices and electricity prices are expected to release greater performance flexibility under the new normal. The long-term dislocation of “market coal” and “planned electricity” is expected to be gradually corrected under the guidance of policies. At that time, thermal power will weaken periodically and return to the attribute of public utilities. It is expected to create sufficient cash flow with stable roe return, and support the capital expenditure or considerable bonus sharing scale of transformation and development.
In the medium and long term, in the new power system with new energy as the main body in the future, the fire potential will gradually transition from electric power supply to flexible peak shaving power supply, and is expected to usher in a new cost recovery mechanism. The last round of cash flow in its life cycle will help thermal power enterprises’ “Second Entrepreneurship”, and the former thermal power leaders may have the most potential to become new energy giants in the future.
Wind power and photovoltaic operation will open up long-term growth space
In the long-term track of new energy power generation investment, the traditional power enterprises facing transformation are expected to become important participants. New energy is expected to be built into the “second growth curve”. Its significant advantages are the abundant cash flow brought by the traditional power basic sector, the highly competitive financing cost and the outstanding ability to obtain resources.
In the long run, there is still room for cost reduction of upstream components and fans. In addition, technological progress is also expected to increase the number of power generation hours, which will provide strong support for the long-term stability and good yield of operation links. In the future, wind power generation is expected to continue to obtain the premium of green environmental attributes, and the current main transaction is the energy value of electricity.
Investment proposal and investment object
In the subdivided sectors, we are optimistic about the investment opportunities of thermal power, nuclear power and new energy operation; Especially optimistic about the revaluation of the value brought by the transformation of traditional power and the development of new energy.
It is suggested to focus on Huaneng Power International Inc(600011) ( Huaneng Power International Inc(600011) , buy), Gd Power Development Co.Ltd(600795) ( Gd Power Development Co.Ltd(600795) , not rated), China National Nuclear Power Co.Ltd(601985) ( China National Nuclear Power Co.Ltd(601985) , not rated) of high-quality assets, leading efficiency and fast pace of new energy transformation. It is expected to become Yunnan Wenshan Electric Power Co.Ltd(600995) ( Yunnan Wenshan Electric Power Co.Ltd(600995) , not rated) of the energy storage operation platform under the southern power grid through asset restructuring. Other suggested targets include China Three Gorges Renewables (Group) Co.Ltd(600905) ( China Three Gorges Renewables (Group) Co.Ltd(600905) , not rated), Fujian Funeng Co.Ltd(600483) ( Fujian Funeng Co.Ltd(600483) , not rated), Zhongmin Energy Co.Ltd(600163) ( Zhongmin Energy Co.Ltd(600163) , not rated), the distribution network energy-saving listing platform of State Grid Chongqing Fuling Electric Power Industrial Co.Ltd(600452) ( Chongqing Fuling Electric Power Industrial Co.Ltd(600452) , not rated), and the core power distribution and integrated energy platform of Three Gorges group Chongqing Three Gorges Water Conservancy And Electric Power Co.Ltd(600116) ( Chongqing Three Gorges Water Conservancy And Electric Power Co.Ltd(600116) , not rated).
Risk tips
The growth space of new energy power generation may be lower than expected; The fundamentals of thermal power may continue to deteriorate; The yield level of new energy operation may be reduced; The promotion of power market-oriented reform may not be as expected.
