The reform of coal power supply side keeps improving the uti

This week, Hebei Development and Reform Commission issued the announcement on the completion of thermal power capacity reduction in 2019 and the policy and mission in 2020. In the announcement document, Hebei Province screened and removed 13 coal-fired units in 2019, and calculated the installed capacity of 506000 kilowatts. Together, the policy of capacity reduction in 2020 was released It is planned to screen 16 coal-fired power units with a capacity of 551000 kilowatts annually. The units shall be shut down before the end of September 2020 and relevant equipment shall be removed before the end of October 2020.

 

 

 

Since the end of 2019, several provinces in China have successively published the shut down screening status of coal-fired power generation units in 2019: Jiangsu screened 1187500 kilowatts of backward coal-fired power capacity, Guangdong calculated to shut down 1364000 kilowatts of small thermal power in four batches, Shandong shut down 324000 kilowatts of coal-fired power units, Sichuan shut down 270000 kilowatts of coal-fired power units, Heilongjiang shut down 28.5 kilowatts of coal-fired power units Ten thousand kilowatts, Inner Mongolia screening coal power backward production capacity of 136000 kilowatts, Anhui screening coal power backward production capacity of 42000 kilowatts.

 

 

 

At the beginning of 2020, the national energy work conference introduced the situation of coal-fired power capacity reduction in 2019. In 2019, China screened and shut down 20 million kilowatt coal-fired power units, over fulfilled the capacity reduction mission, and the shutdown scale was close to the sum of 2017 (9.29 million kilowatts) and 2018 (11.97 million kilowatts).

 

 

 

At the end of 2019, the state owned assets supervision and Administration Commission issued the pilot plan for regional integration of coal and power resources of central enterprises, which classified five provinces and regions with excess coal and power capacity and consecutive losses of coal and power enterprises in Gansu, Shaanxi (excluding the State Energy Group), Xinjiang, Qinghai and Ningxia into the first batch of pilot projects for regional integration of coal and power resources of central enterprises, requiring 3 In, the pilot work of coal and power resources integration of central enterprises was launched at all times. By the end of 2021, the pressure drop of coal power capacity will be one quarter to one third, and the scale of pressure drop of coal power capacity will be 12-17 million kilowatts.

 

 

 

We believe that under the guidance of the current national ministries and commissions, China’s coal power supply side reform process will continue to advance steadily, so as to improve the power supply and demand from the supply side, improve the utilization hours of coal-fired power units, and the problems of low load and poor profitability of coal-fired power units are expected to continue to be improved.

 

 

 

At the current time point, we believe that the utilities sector with certain counter cyclical and defensive performance is expected to walk out of a more stable market. We recommend thermal power sector with strong performance improvement certainty and valuation at the bottom. In terms of individual stocks, we recommend Huaneng world and Huadian world with relatively high performance sensitivity to coal price, and fortune shares with safety margin valuation. We advocate to pay attention to coal transportation The cost is expected to benefit from the reduced long-term power generated by the completion of Haoji railway. Considering the defensive nature of investment in hydropower industry and the time threshold when the production cycle of large-scale power stations will come, we recommend Yangtze River power with stable operation, sufficient cash flow and high installed capacity, and state investment power with increased space for hydropower and expected surplus recovery of thermal power.

 

 

 

Danger tips: 1. The power supply and demand are in danger of deteriorating, and the policy is not as advanced as expected; 2. The coal price is in danger of non seasonal rise, and the incoming water is still in danger of drying up.