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In 2021, the contradiction between supply and demand pushed up the price of coal. After October, it was quickly corrected under the strong regulation of policies. In 2021, there are three main reasons for the tight supply and demand of thermal coal: 1) the demand for coal has increased significantly. Due to the good epidemic control in China, the upstream and downstream industries, the rapid growth of power demand, and the insufficient power of hydropower, the demand for coal has increased significantly; 2) China’s supply growth is relatively slow. China’s coal production is growing slowly under multiple constraints such as safety, environmental protection and anti-corruption; 3) Overseas imports decreased. Due to the impact of epidemic situation, weather and policies, China’s import increment is small. There are two main reasons for the tight supply and demand of coking coal: 1) significant restrictions on imports; 2) The demand for power coal has increased significantly, occupying part of the production of coking coal. There are two main reasons for the sharp rise of coke price: 1) policies such as capacity removal and environmental protection affect production; 2) Driven by the rising price of coking coal.
In 2022, the coal industry will face a pattern of tightening supply, strengthening demand and stabilizing price. The coal price center is expected to move down, and the sector valuation has been at a relatively low level. On the supply side, due to the lack of relevant investment planning in the early stage, China’s future capacity growth is relatively limited, and the capital expenditure of international coal enterprises continues to be low, so it is difficult to have a significant increase in imports. The policy side tends to improve mine scale and efficiency and control coal production. On the demand side, the current growth rate of thermal power demand is optimistic. The growth rate from 2022 to 2023 is expected to remain at about 3%, while the investment in real estate infrastructure is low, the demand for cement and steel is weak, and the demand for coal is expected to decline slightly by about 2%. In comparison, the coal chemical industry encouraged by the policy may have growth potential. In terms of price, the supply and demand of coal will remain in tight balance from 2022 to 2023, and the supply and demand gap will still be, but it will gradually narrow. At the same time, considering policy regulation and other factors, it is expected that the coal price center will move down in 2022, the power coal market price center will be 720-880 yuan / ton, and the coking coal price center will also move down. Overall, the volatility of coal price is weakened. The price in 2022 may be lower than that in 2021, but higher than the average value of each year during the 13th Five Year Plan period. In terms of sectors, the price earnings ratio (TTM) of coal sector is 7.55 times, and the latest ratio of PE of coal sector to Shanghai and Shenzhen 300 is 3.3. The current sector valuation has fallen to a large extent compared with the previous period.
In terms of investment opportunities, the coal industry is mainly concentrated in three directions: high proportion of long-term association, large elasticity of capacity growth and energy transformation. First of all, the overall upward movement of the price center of the long-term association will benefit more companies with a relatively high proportion. Its performance is expected to be released steadily in the future and has the ability to stabilize and high dividends. It is suggested to pay attention to: China Shenhua Energy Company Limited(601088) , Shaanxi Coal Industry Company Limited(601225) , Pingdingshan Tianan Coal Mining Co.Ltd(601666) , Shanxi Coking Coal Energy Group Co.Ltd(000983) . Secondly, the future capacity increment of the coal industry is limited, and the profitability of coal enterprises is better than before. At present, the elasticity of capacity growth is the elasticity of future performance expectations. It is suggested to focus on the targets with large capacity growth space in the future: China Coal Energy Company Limited(601898) , Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) , Shanxi Coking Coal Energy Group Co.Ltd(000983) , Beijing Haohua Energy Resource Co.Ltd(601101) . The double carbon goal will be the long-term main line in the future. Some enterprises are transforming the layout of new energy directions such as energy storage, wind power photovoltaic operation and hydrogen energy by relying on the advantages of main business resources or by-products. It is suggested to pay attention to the leading targets of new energy transformation: Shanxi Meijin Energy Co.Ltd(000723) , power investment energy, Yankuang energy source, Jinneng Science&Technology Co.Ltd(603113) .
Risk warning: the economic growth rate is lower than the expected risk; Policy regulation risk; Risk of continued substitution of renewable energy.
