The Zhitong Finance App learned that Guoxin Securities released a research report stating that coal is China's basic energy product. Under policy regulation, safe supply and flexible supply are achieved, coal for people's livelihood is guaranteed through the long-term cooperation price mechanism, and price fluctuations are calmed down. Supported by supply-side structural reforms and a long-term bargaining system, the boom in the coal industry is expected to continue. The price of coal is stable. Major coal companies operate steadily, their dividends have increased, their investment value is prominent, and they maintain the industry's “overrated” rating.
▍ The main views of Guoxin Securities are as follows:
1. Basic knowledge: There are many types of coal, and the distribution is uneven
There are many types of coal. According to use, it can be divided into coal for power, coal for coking, and coal for chemical use, accounting for 62.8%, 28.9%, and 8.3% respectively in 2022. China accounts for half of the world's coal production and consumption. In 2022, coal production and consumption were 4.56 billion tons and 4.23 billion tons respectively, accounting for 51.8% and 54.8% of the world respectively. China's coal supply and demand are mismatched. Coal resource reserves and production are concentrated in North China and Northwest China, while coal consumption is concentrated in North China and East China.
2. Policy regulation: safe supply, flexible supply
The impact of policy regulation on the coal industry is mainly reflected in both supply and price. On the supply side, ① Since 2016, China has initiated supply-side structural reforms, with backward production capacity falling out, and advanced production capacity was steadily released; ② In 2020, the global economy recovered steadily after the epidemic, domestic and foreign demand grew rapidly, and China rapidly increased supply through nuclear expansion; ③ establish an output and capacity reserve system to ensure a stable supply of coal; ④ coal mine safety production supervision disrupted supply in stages.
On the price side, ① in May 2022, the country and local authorities clarified a reasonable range of medium- to long-term trading prices for thermal coal; ② formed a “2+4+4" negotiation pricing mechanism for coking coal. Supported by supply-side structural reforms and a long-term bargaining system, the boom in the coal industry is expected to continue.
3. Supply and demand pattern: dynamic balance, price stability
The supply side remains stable: In terms of thermal coal, ① domestic production: the main production areas of Jinshan, Shaanxi, and Mongolia account for about 75% of production, which is difficult to increase; domestic supply increases in Xinjiang, and railway construction is expected to increase the export capacity of coal; ② Foreign imports: In 2023, the import volume reached a record high of 470 million tons, making it difficult to continue growing. In terms of coking coal, ① domestic production: mainly produced in Shanxi, Shandong, Anhui, etc., which is difficult to increase; ② Foreign imports: Mongolian imports have potential for growth.
The demand side remains stable in the medium to long term: in the medium term, coal will still be China's main energy source. In the long run, the coal positioning will shift from the main energy supply to a back-up guarantee, and the share of non-fossil energy in China will steadily increase in the future.
4. Coal companies: steady operation and increased dividends
Since 2020, with the rise in coal prices, the operating income and net profit of major listed companies have achieved steady growth, and dividend rates have increased, and the investment value has become prominent. By sector, there are many companies in the thermal coal sector, with many tens of million-ton mines. China's Shenhua is the industry leader; most coking coal sector companies are concentrated in the central and eastern part. Panjiang shares and Shanxi have large coking coal resources, and Lu'an Huaneng produces a lot; there are few companies in the anthracite sector, concentrated in Shanxi, and Huayang shares produce a lot.
Risk warning:
Overseas economic slowdown; massive release of coal production capacity; replacement of new energy sources; impact of safety accidents.