The Zhitong Finance App learned that Galaxy Securities released a research report saying that in January-February, the electricity consumption of the entire society was 153.6 billion kilowatt-hours, an increase of 11.0% over the previous year. The bank said that the increase in thermal power generation and the decline in coal prices are jointly driving up profitability. In the short term, it recommends a thermal power sector with policy catalysis, continuous performance improvement, and room for valuation improvement. In addition, attention should also be paid to investment opportunities in the coal and electricity integration and combustion engine industry chain. Furthermore, nuclear power and hydropower have high performance certainty, strong dividend capacity, and long-term allocation value. The installed capacity of new energy sources is expected to exceed the target. There is broad scope for long-term growth, and strategic allocation can be carried out at low times.

Recommended attention: Wanneng Electric Power (000543.SZ), Zhejiang Electric Power (600023.SH), Huadian International (600027.SH), Guodian Electric Power (600795.SH), Huaneng International (), Changjiang Electric Power (DAB), Sichuan Investment Energy (Sichuan), etc. 600011.SH 600900.SH 600674.SH

Incident: The National Energy Administration and the National Bureau of Statistics released electricity industry statistics and energy production: in January-February, the country added 9.89 GW of installed wind power, an increase of 69%; the country added 36.72 GW of installed solar energy, an increase of 80% over the previous year; the country added 5.08 GW of thermal power installed, a year-on-year decrease of 11%. In January-February, the electricity consumption of the entire society was 153.6 billion kilowatt-hours, an increase of 11.0% over the previous year.

Galaxy Securities reviews are as follows:

The installed capacity of new energy sources is growing at a high rate, and the installed capacity is expected to exceed the target for the whole year.

In January-February, Scenery added 46.61 GW of installed capacity, an increase of 78% over the previous year, accounting for 88% of the country's new installed capacity during the same period; by the end of February, Scenery had a total installed capacity of 1098.23 GW, an increase of 40% over the previous year, accounting for 37% of the country's total installed capacity during the same period. The “2024 Energy Work Guidelines” clearly state that the installed capacity of power generation will reach about 3.17 billion kilowatts in 2024, an increase of 250 million kilowatts compared to 2023. It is estimated that the new installed capacity of new energy sources will exceed 200 million kilowatts (200 GW). Currently, photovoltaic modules, loan interest rates, etc. are all in a low position. Considering that the reduction in the red line of new energy consumption is conducive to increasing the growth space for new energy installations, the scale of wind and light installations is expected to reach a new high this year. After China historically surpasses fossil energy in 2023, the share of installed renewable energy will continue to increase, and the installed structure will continue to be optimized.

The increase in thermal power generation and the decline in coal prices promote an increase in profitability.

In January-February, industrial thermal power generation increased by 9.7%. The growth rate was 0.4 percentage points faster than in December of the previous year, mainly benefiting from strong demand for downstream electricity. The “2024 Energy Work Guiding Opinions” clarify that while stabilizing and increasing coal production, it is expected that supply flexibility will be enhanced through transportation channels and storage capacity building, which is expected to drive the coal price center downward. Coal prices have declined markedly since 2024. From the beginning of the year until March 22, the average price of 5,500 kcal thermal coal in Qingang was 908 yuan/ton, down 227 yuan/ton year on year; on March 22, the market price of 5,500 kcal thermal coal in Qingang was 835 yuan/ton, down 270 yuan/ton year on year. Currently, the heating season is over and demand is low. Against the backdrop of high power plant inventories and hydropower and new energy sources squeezing coal and electricity output, we expect that there is still room for coal prices to decline in the market. The increase in electricity production and the fall in coal prices will jointly drive the increase in coal power profits.

Economic recovery was compounded by the impact of a low base, and the electricity consumption of the whole society achieved high double-digit growth.

In January-February, the electricity consumption of the entire society was 153.6 billion kilowatt-hours, up 11.0% year on year. Among them, the primary industry/secondary industry/tertiary sector/household electricity consumption was 192/9520/2869/273.5 billion kilowatt-hours respectively, up 11.1%/9.7%/15.7%/10.5% year on year. In January-February, economic operations continued to recover as macroeconomic policy stepped forward, laying a good foundation for the economy to achieve the expected 5% growth target for the whole year. Considering the impact of last year's low base, the electricity consumption growth rate of the whole society was only 2.3% from January to February 2023, and the electricity consumption of the whole society grew at a compound rate of 6.6% over two years, still maintaining a relatively rapid growth trend.

Risk warning: the risk that the installed capacity falls short of expectations; the risk that coal prices will continue to be high; the risk of falling feed-in tariffs; the risk of increased competition in the industry, etc.