The Zhitong Finance App learned that China Galaxy Securities released a research report saying that the overall performance of the power sector is highly deterministic and has strong dividend capacity. It will continue to benefit from central state-owned enterprise reforms in the future, and continues to be optimistic about the long-term investment value of the power sector. Short-term recommendations include a thermal power sector with policy catalyst, continuous improvement in performance, and room for improvement in valuation; focus on nuclear power and hydropower with long-term, low-risk capital; and strategically lay out the new energy sector when low.
Individual stock attention: Huadian International (01071), Wanneng Electric Power (000543.SZ), Zhejiang Electric Power (600023.SH), Huaneng International (00902), Changjiang Electric Power (600900.SH), Sichuan Investment Energy (600674.SH), China General Nuclear Power (01816), etc.
The main views of China Galaxy Securities are as follows:
The bank promoted an increase in the compliance rate of the Changxie Association. In 2023, the unit price or unit fuel cost for thermal power companies entering the furnace generally dropped by more than 10%. According to the disclosed annual reports or annual report forecasts, Huaneng International, Zhejiang Electric Power, Guangdong Electric Power, etc. have turned losses into profits, while Huadian International, Guodian Electric Power, Anhui Electric Power, and Jiangsu Guoxin have achieved high profit growth.
Coal prices are expected to continue to decline in 2024, and there is still room for improvement in the profits of thermal power companies
On the supply side, the “2024 Energy Work Guiding Opinions” clearly state that while stabilizing and increasing coal production, supply flexibility will be enhanced through transportation channels and storage capacity building. On the demand side, the current heating season has ended and the demand season is low. Against the backdrop of high power plant inventories and hydropower and new energy sources squeezing coal and electricity output, China Galaxy Securities predicts that there is still room for coal prices to decline in the market. Coal prices have declined markedly since 2024. From the beginning of the year until April 2, the average price of 5,500 kcal thermal coal in Jingtang Port was 904 yuan/ton, down 229 yuan/ton; on April 2, the market price of 5,500 kcal thermal coal in Jingtang Port was 825 yuan/ton, down 248 yuan/ton year on year.
The installed capacity of new energy sources has grown rapidly since the beginning of the year, 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).
China Galaxy Securities pointed out that at present, photovoltaic modules, loan interest rates, etc. are all in a low position. Considering that the reduction in the red line for new energy consumption is beneficial to increasing the growth space for new energy installations, the scale of wind and light installed capacity 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 rise, and the installed structure will continue to be optimized.
Risk warning: Risk of policies falling short of expectations; risk of project progress falling short of expectations; risk of new energy power generation output falling short of expectations; risk of increased industry competition; risk of declining industry subsidies.