Market review this week:
CITIC coal index closed at 2668.9 points, up 5.5%, outperforming the Shanghai and Shenzhen 300 index by 4.4pct, ranking No. 1 in the rise and fall list of CITIC primary sector.
Analysis of key areas:
Power coal: the turning point of daily consumption will be close, and the upward power will weaken. As of Friday, the mainstream quotation of port q5500 was about 1000 yuan / ton, up 55 yuan / ton on a weekly basis. In terms of producing areas, due to the impact of epidemic situation and supply guarantee policy in some areas this week, the annual output of coal mines was implemented, and the operating rate decreased only slightly; The superimposed procurement demand has improved, the supply of coal mines in production has remained high, and the overall supply has not been significantly tightened; At the same time, the positive preparation of goods before the festival, the centralized release of purchasing sentiment, and the rising trend of coal prices in origin continued. In terms of ports, the demand of downstream users has improved. Disturbed by the Indonesian coal import ban, the market is bullish, the procurement of downstream users has increased, and the transfer out volume has increased slightly month on month; Due to the continuous upside down of coal prices, the transfer in is less than the transfer out, and the inventory of Beigang continues to decline. In the downstream, the daily consumption fluctuates at a high level, coastal power plants go to the reservoir slowly, and regional power plants still need to replenish the reservoir. In most parts of the country, the temperature is low, the demand for heating electricity is sufficient, and the daily consumption remains high and volatile; Based on the strong performance of daily consumption, the inventory maintained a slow downward trend; In order to ensure the safety of coal and electricity for the Winter Olympics, some regions advocate local New Year celebrations under the superposition of the epidemic, and regional power plants still need to replenish storage. In terms of import, the international demand for thermal coal in winter is still supported, and the price of imported coal continues to rise; Recently, the profit of imported coal is poor, and the inventory of Chinese power plants is sufficient, which limits the enthusiasm of Chinese end users and traders to purchase imported coal. The reduction of the amount of imported coal will form a strong support for China’s coal market. On the whole, the Spring Festival and Winter Olympics are approaching, and the terminal replenishment task is upgraded; Under the expectation of local Chinese new year, some power plants actively pick up the warehouse. In addition, in order to make up for the production affected by the shutdown during the Winter Olympic Games, some non electric terminals such as cement chemical industry have rushed to work, and the demand for raw materials such as coal has also been released, resulting in the continuous rise of coal prices. After the release of phased demand and the cooling of speculation, the market will return to calm. With the Spring Festival approaching, the daily consumption is about to have an inflection point, adding that China’s coal output is still high, and it is difficult for coal prices to rise continuously.
Coking coal: both supply and demand are weak, and the price may maintain stable operation. This week, the coking coal market maintained stable operation, and the price of coking coal in origin rose and fell. As of Friday, the Shanxi main coke of Jingtang Port closed at 2830 yuan / ton, unchanged on a week-on-week basis. This week, some coal mines in Inner Mongolia, Gujiao in Taiyuan, Shanxi, Guxian in Linfen and Lingshi in Jinzhong have stopped production and holidays. Some coal mines are expected to reduce or not have holidays due to the impact of the epidemic, and the overall supply has been reduced. In terms of importing Mongolian coal, China suspended the nucleic acid detection of Mongolian drivers on the 18th due to Mongolia’s private change of closed-loop mode, resulting in no customs clearance at Ganqi Maodu port on the 19th. According to sxcoal data, Ganqi Maodu port has been cleared for 3 days, with an average of 92 vehicles per day, a decrease of 6 vehicles compared with last Sunday; Due to the low customs clearance and limited trading resources at the port, the price of Mongolian coal continues to rise. The mainstream price of Mongolian 5 raw coal is about 2000-2060 yuan / ton and the mainstream price of Mongolian 5 clean coal is about 2400-2500 yuan / ton. On the demand side, downstream coke enterprises are still actively replenishing storage, but considering that the winter storage of downstream coke enterprises is coming to an end, the pace of procurement has slowed down; With the weakening of coke market sentiment and more inventories have been replenished to a reasonable level, downstream coke enterprises need to weaken. On the whole, the winter storage and replenishment is coming to an end, the coke market sentiment has weakened, and the procurement rhythm has slowed down; However, considering the tight supply of China’s coking coal market and the limited import of Mongolian coal under the epidemic, it is expected that the mainstream of coking coal market will be stable temporarily before the festival, and individual coal types will be slightly adjusted.
Coke: both sides of coke and steel are expected to increase production restriction, and the mainstream is running stably for the time being. On the supply side, the start-up of coke enterprises in producing areas has picked up steadily. However, with the approaching of the Winter Olympic Games, Shanxi Jinzhong and Shandong regional coke enterprises have received the notice of production restriction, and the coke supply is expected to tighten. On the demand side, the downstream steel mills continued to resume production, and the superimposed new blast furnaces were put into operation one after another. The hot metal output and coke demand picked up significantly. Considering that Tangshan, Hebei, has released the staggered peak production plan again, and other regions also have production restriction requirements to varying degrees, the production restriction policy of steel mills around Beijing has been relatively clear, and the demand for coke may decline. However, the demand for replenishment of stock in some steel mills still exists, and the inquiry for coke is still relatively positive. On the whole, with the Winter Olympics approaching, the expectation of production restriction of coke and steel will increase, the supply and demand of Coke will be weak, and the market sentiment may weaken. However, considering that the demand for replenishment of inventory of some steel mills still exists, the sales situation of coke enterprises is good and in the stage of inventory reduction, and the coke market may maintain stable operation in the short term.
Investment strategy. This week, coal enterprises successively released performance forecasts, and the net profit showed a multiple growth. The main reason is that in the process of energy transformation, the demand for products in traditional industries itself is rigid, while on the supply side, under policy constraints and pessimistic expectations of enterprises, enterprises are significantly reducing capital expenditure on traditional businesses even if their profits increase greatly and their cash flow is abundant, As a result, when demand expansion meets supply constraints, prices rise sharply. We believe that this year’s opportunity lies in “transformation” and the switching of valuation system. On the one hand, due to the significant increase of the benchmark price of the long-term association, the profits of coal enterprises will remain high. At present, the valuation is generally at the level of 4 ~ 7 times, and the safety margin is high. On the one hand, under the background of “double carbon”, the proportion of coal in China’s energy structure may decline rapidly after 2030. Transformation and development is a problem that coal enterprises have to face. With its abundant cash flow and important strategic position, coal enterprises have unique advantages in transformation and development. At present, many coal enterprises have released long-term plans for transformation, and the curtain of transformation of coal enterprises is slowly opening. The transformation of traditional energy enterprises under the goal of “double carbon” is particularly worth looking forward to. Stick to the core assets and be optimistic about the valuation repair of high long-term association and high score red coal enterprises. Key recommendations: China Shenhua Energy Company Limited(601088) , China Coal Energy Company Limited(601898) , Shaanxi Coal Industry Company Limited(601225) , Pingdingshan Tianan Coal Mining Co.Ltd(601666) . In addition, the transformation of traditional energy enterprises under the goal of “double carbon” is worth looking forward to. The key recommendations are power investment energy (green power), Shan Xi Hua Yang Group New Energy Co.Ltd(600348) (energy storage), Huaibei Mining Holdings Co.Ltd(600985) (new materials, green power), Yankuang energy (new materials, green power), Shanxi Meijin Energy Co.Ltd(000723) (hydrogen energy) and China Xuyang group (hydrogen energy). Actively layout the national reform in Shanxi, focusing on Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) , Shanxi Coking Coal Energy Group Co.Ltd(000983) with expected asset injection.
Risk tip: China’s output release exceeded expectations, the downstream demand was less than expected, and the on grid electricity price was significantly reduced.
