Huatai Securities released a 1Q24 outlook for the public environmental protection industry, stating that in the face of continuous growth in thermal power generation and a year-on-month decline in coal prices, 1Q24 thermal power profits are expected to continue to recover; nuclear power generation has increased year-on-year, and performance is expected to grow.
The Zhitong Finance App learned that Huatai Securities released a 1Q24 outlook for the public environmental protection industry, stating that in the face of continuous growth in thermal power generation and a year-on-month decline in coal prices, 1Q24 thermal power profits are expected to continue to recover; the improvement in hydropower generation is limited; the year-on-year increase in nuclear power generation is expected to increase; benefiting from the continuous increase in installed capacity due to new wind conditions, it is expected that the net profit of most new energy operators will maintain a slight year-on-year increase. Looking ahead to 2Q24, the profit stability of coal-fired power units will increase with the support of the capacity electricity price policy. According to historical experience, the El Niño incident will result in excessive precipitation during the next year's flood season, and the influx of water and electricity may be improved. Equipment companies in the environmental protection sector will benefit from equipment renewal policies, and their performance is expected to grow further.
The main views of Huatai Securities are as follows:
Thermal power: Power generation continues to grow, and performance is expected to continue to recover
Electricity generation continued to grow in 1Q24, coal prices declined year-on-month, and thermal power performance is expected to continue to recover. According to data from the National Bureau of Statistics, the country's thermal power generation from January to February 2024 was +9.7% year-on-year. Coal prices showed a year-on-month downward trend. In January-February 2024, the average price of coal liquidation at the end of Qinhuangdao Power Company was 917 yuan/ton (5,500 kcal), -19.54% year-on-year and -2.09% month-on-month. After the implementation of the capacity electricity price policy, the profitability stability of thermal power plants was improved. After taking into account the slight drop in coal-power prices in some regions, Huatai Securities still believes that 1Q24 thermal power profits will be further repaired, and that the net profit of major thermal power companies will increase year-on-year.
Hydropower & nuclear power: The improvement in hydropower generation is limited, and nuclear power is stable 1Q24
The improvement in hydropower generation is limited, and nuclear power is running steadily. According to data from the National Bureau of Statistics, the country's hydropower generation capacity from January to February 2024 was +0.8% year-on-year. Huatai Securities expects a slight year-on-year decline in hydropower generation in Yunnan Province in 1Q24; according to the Kunming Electric Power Trading Center, the average price of electricity in the clean energy bilateral negotiation market in Yunnan Province from January to February 2024 was 0.291 yuan/kilowatt-hour, an increase of 0.013+ yuan/kilowatt-hour over the previous year; thanks to the incremental profit brought by Huaneng Sichuan Company acquired in 2023 and new energy installations put into operation, Huatai Securities expects its net profit to mother +14% to +39% year-on-year. In 1Q24, nuclear power units operated steadily. According to data from the National Bureau of Statistics, nuclear power generation capacity in January-February was +3.5% year-on-year, and performance is expected to increase.
New energy: The incoming wind situation is average, and the installed wind power/photovoltaic capacity continues to grow
The 1Q24 incoming wind situation is average. According to the power generation data of the National Bureau of Statistics, the country's wind power generation was +5.8% year-on-year; according to the Longyuan Electric Power Company announcement, the company's cumulative wind power generation capacity from January to February 2024 was -0.62%, and the cumulative wind power generation in Inner Mongolia, Zhejiang, Fujian, Xinjiang and other places fell by more than 10% year on year. Considering that the wind power/photovoltaic installed capacity growth trend did not change and the price of new energy electricity was relatively stable in the first quarter, Huatai Securities expects the net profit of new energy operators to maintain a slight year-on-year increase in 1Q24.