Zhitong Financial APP learned that the thermal power plate strengthened against the market in early trading, and Huadian International Power (01071) took the lead. The agency pointed out that the implementation of the long-term association coal policy after the festival is expected to improve the long-term association coverage, superimposed coal prices are expected to decline, and continue to be optimistic about the performance improvement of thermal power enterprises in the second quarter. As of press time, Huadian International Power (01071) rose 5.02% to HK $2.72; Huaneng International Power (00902) rose 2.69% to HK $3.82; China Resources Power Holdings (00836) rose 1.93% to HK $13.76; Datang Power (00991) rose 0.83% to HK $1.21; China Power (02380) rose 0.86% to HK $3.52.

The National Development and Reform Commission previously issued the Circular on further improving the Price formation Mechanism in the Coal Market, which will be implemented on May 1, 2022. The agency pointed out that the implementation of the long-term association coal policy after the festival is expected to improve the long-term association coverage, superimposed coal prices are expected to decline, and continue to be optimistic about the performance improvement of thermal power enterprises in the second quarter.

According to Guohai Securities, for every 10% increase in the proportion of the long Association, the cost of coal-fired electricity will be reduced by about 0.02 yuan per kilowatt-hour. Corresponding to Huadian International, Huaneng International, Datang Power Generation, Guodian Electric Power and Zhejiang Power Company will release net profits of 5.3,11.0,6.6,3.7 and 480 million yuan respectively in the second quarter.

Changjiang Securities pointed out that there has been a relatively obvious decline in coal prices since late March, and the high probability will be effectively reflected in the production and operation of the power plant in the second quarter, and the quarterly profit improvement trend of thermal power assets is still expected. At the same time, the coal price ceiling of 770 yuan / ton ensures the recovery of the profitability of thermal power assets. After the spiritual implementation of the document, thermal power performance repair and stability are expected to be further enhanced, and the overall profitability of thermal power assets will be restored.