The Zhitong Finance App learned that Guosheng Securities released a research report saying that at present, the two main investment values of thermal power plants overlap at the point where profit restoration and entry into high-dividend dividend assets are transferred. On the one hand, there is still plenty of room for thermal power profit recovery. Expectations are stabilizing on the revenue side, driven by deepening electricity reform, and coal prices are fluctuating downward on the cost side. On the other hand, the dividend level of thermal power companies is expected to increase after increasing profitability and stabilizing expectations, driving the sector into high-dividend asset valuation repair.
However, the biggest advantage of integrated coal and electricity assets is that they have both advantages, and profitability and dividend levels are expected to increase steadily. Stable cost reduction is achieved by increasing the domestic coverage rate of low-cost coal. The internal conversion of coal and electricity profits to flatten fluctuations in coal and electricity, and profit expectations are stable. At the same time, there is a safety cushion underpinning coal assets, and there is a basis for raising dividend levels, and priority is given to entering the ranks of high dividends.
Recommended attention: Integrated coal and electricity platform enterprises.
Key recommendations: New energy collection (601918.SH) with rapid growth in installed electricity and abundant electricity and coal to achieve 100% coverage space; future coal has room for growth, Shaanxi Energy (001286.SZ); Inner Mongolia Huadian (600863.SH), which has integrated coal and electricity advantages highlight high dividends.
Recommended attention: Guodian Electric Power (600795.SH), China Shenhua (601088.SH), Panjiang (600395.SH), Power Investment Energy (002128.SZ), Jinkong Electric Power (000767.SZ), Huadian Energy (), Suneng (USD). 600726.SH 600925.SH
Guosheng Securities's main views are as follows:
Coal accounts for more than 70% of fuel costs, and the performance of coal price fluctuations is sensitive
Guosheng Securities said that fuel costs basically account for more than 70% of the total cost of thermal power companies. Without considering the price side of electricity, thermal power is a cost-sensitive asset, and fluctuations in coal prices directly affect thermal power performance. The average price of 5,500K thermal coal in the 2021-2022 Bohai Rim Rim market was 1,025 yuan/ton and 1,280 yuan/ton, respectively. In 2021, most thermal power companies experienced pressure losses. In 2021, the unit price of imported coal increased by more than 60%, the price transmission of coal and electricity was only 16.6%, and the execution time was only three months. The coal and electricity price ratio was seriously distorted, and the coal power sector (CITIC) achieved a net profit of 35.401 billion yuan, a year-on-year decrease of 171.27%.
In 2022, electricity prices from the National Association of China basically rose at the top of 20%, and implementation of the “three 100%” medium- and long-term contracts for electricity and coal was strengthened, but there was limited relief from the pressure on coal prices to remain high, and the thermal power sector still lost a large area.
The average annual market price of 5,500k thermal coal in the Bohai Rim fell back to 946 yuan/ton in 2023. As of 2023Q3, the thermal power sector achieved net profit of 65.342 billion yuan, an increase of 351.89% over the previous year. Most thermal power companies reversed losses in 2023, but cost pressure still exists. Since 2024, the average price of 5,500k thermal coal in the Bohai Rim is 918 yuan/ton, and there is still plenty of room for restoration.
Coal and electricity joint ventures reduce the impact of ironing costs, a win-win situation for coal and electricity, steady and low
Guosheng Securities believes that coal and electricity integration organically integrates upstream and downstream industries of coal and electricity through mutual shareholding, long-term stability agreements, joint asset ventures, and integrated projects, etc., to guarantee the proportion of low-cost coal for internal power plants and effectively reduce the risk of fluctuations.
From 2016 to 2019, the National Development and Reform Commission successively issued “Guiding Opinions on Developing Coal-Electricity Joint Ventures”, “Supplementary Notice on Further Promoting Coal-Electricity Joint Ventures to Promote Industrial Upgrading”, and “Notice on Increasing Policy Support to Further Promote Coal and Power Joint Ventures”, encouraging large thermal coal companies and thermal power companies to speed up the implementation of coal-power co-operation, and determined the first batch of key projects in 2019, involving 28.26 million kilowatt coal power projects and corresponding supporting coal mines. In January 2023, the National Development and Reform Commission once again emphasized the promotion of “two joint ventures” of coal and coal electricity, coal power and new energy at a regular press conference. The policy supports long-term stability improvements at both ends of the superposition of coal and electricity, and it is expected that the valuations of integrated coal and power enterprises will continue to recover.
Take a 1 million unit as an example. According to the national average thermal power usage time of 4,466 hours and coal consumption of 290 grams/kilowatt-hour, under the conditions of an average coal price of 965 yuan/ton in the 5,500k market in 2023, if Changxie coal coverage ratio is 30% (redeemed according to 760 yuan/ton), the net electricity profit is 0.0282 yuan; if the Changxie coal coverage ratio increases to 60%, the net profit margin of 80%; if Changxie coal coverage ratio increases to 90%, the net profit margin for electricity is 0.0736 yuan compared to 0.0736 yuan. coverage The rate increased by 161%.
Changxie coal controls costs, stabilizes electricity prices, and is optimistic about integrated coal and electricity profit stability improvement and valuation repair in the long term
As the construction of new energy sources continues to advance, the regulatory role of thermal power peak regulation is becoming more and more prominent, and the long-term transformation to an indispensable flexible power source is becoming more and more prominent. On the electricity price side, the coal and electricity capacity price mechanism was introduced in 2023, and a new coal and electricity price mechanism was initially formed to recover fixed costs for capacity electricity prices, variable electricity price recovery costs, and auxiliary service recovery and adjustment costs, promoting the stabilization of the profit space for thermal power. On the cost side, the long-term price agreement for electricity and coal is signed and executed according to the “benchmark price+floating price” price mechanism. The benchmark price is 5,500 kcal of thermal coal 675 yuan/ton. The increase in the Changxie ratio directly stabilizes the cost of power plants. Integrated coal and power enterprises can directly use internal coal mines to guarantee the fulfillment of a high proportion of Changxie coal prices, which highlights the advantages of the same industry.
Guosheng Securities believes that if coal prices rise, coal-power joint ventures can guarantee excessive profits compared to their peers through domestic sales; if coal prices fall, profits in the electricity sector will increase to make up for the contraction of the coal business, and iron out fluctuations through coal-power joint ventures to achieve a win-win situation for coal and electricity. Resolve the historical contradiction between “market coal” and “planned electricity” caused by “coal power dominates”. In the long term, I am optimistic about improving the profit stability of coal-power integration and the restoration of valuation.
Risk warning: Changes in policy direction or implementation fall short of expectations; changes in macroeconomic conditions; emergence of growth market opportunities; deviations in measurement assumptions; operating conditions of related companies fall short of expectations.