The Zhitong Finance App learned that on May 14, the National Development and Reform Commission announced the revised “Basic Rules for the Operation of the Electricity Market” (hereinafter referred to as the “Rules”). The “Rules” have further adjusted the relevant market scope, operating agency, and transaction entity statements. At the same time, they have improved statements relating to market members and types of market transactions, improved definitions and transaction methods such as electricity energy and ancillary service transactions, and further refined requirements related to risk prevention and control. The new regulations will come into effect on July 1, 2024.
Meanwhile, the electricity sector has continued to soar recently. According to the news, recently, a piece of news about the increase in electricity prices for residents spread on social platforms. It is said that electricity prices for residents will rise from June 1, and at the same time, Gu Peak pricing will be cancelled and segmented pricing will be changed.
In response, the reporter called the State Grid service hotline. The hotline customer service staff responded, “For the time being, we have not received any relevant policy documents issued by the price authorities, nor the relevant electricity price adjustment notices from power supply companies.” The other party stressed that before electricity prices are adjusted, power supply companies will generally announce it to the public in advance through the official channels of the State Grid, and this should be the basis for this.
Recently, the National Energy Administration released the latest data, showing the strong growth trend of electricity consumption in China. According to statistics, the electricity consumption of the entire society reached 2.34 trillion kilowatt-hours in the first quarter of this year, showing the vigorous vitality of economic activity and continued strong energy demand.
Zhang Xing, deputy director of the General Department of the National Energy Administration and press spokesman, said at the press conference that it is expected that during the summer of this year, the country's electricity consumption load will also grow rapidly. The maximum load will increase by more than 100 million kilowatts over the same period last year, and electricity security is under certain pressure. According to comprehensive research, during the peak summer season this year, the country's electricity supply is generally guaranteed. There may be tight electricity supply conditions during peak periods in some regions, mainly Inner Mongolia and some provinces in East China, Central China, Southwest China, and South China. In the event of extreme and disastrous weather, the tight electricity supply situation is likely to increase further.
In the first quarter of this year, the electricity consumption of the entire society in the three provinces of Jiangsu, Zhejiang, and Anhui reached 1964 billion kilowatt-hours, 144.7 billion kilowatt-hours, and 70.8 billion kilowatt-hours, respectively. The year-on-year increase was 11.6%, 12.2%, and 11.7%, higher than the 9.8% growth rate of the country's social electricity consumption. Haitong countries believe that the increase in electricity consumption in the Yangtze River Delta region not only reflects the increase in economic activity, but also the acceleration of industrial transformation and upgrading.
Recently, the China Telecommunication Union released the “National Electricity Supply and Demand Situation Analysis and Forecast Report for the First Quarter of 2024”. The report predicts that the electricity consumption of the entire society in 2024 will be 9.8 trillion kilowatt-hours, an increase of about 6% over 2023. Among them, the electricity consumption rate of the whole society in the first half of the year was slightly higher than 8% year-on-year.
Cinda Securities believes that after many rounds of domestic power supply and demand tension, the power sector is expected to experience improved profits and a revaluation of value. In a situation where electricity supply and demand are tense, the peak value of coal and electricity is highlighted; with the continuous advancement of market-based electricity reforms, the electricity price trend is expected to rise steadily and slightly, the electricity spot market and auxiliary service market mechanisms are expected to continue to be promoted, and the capacity electricity price mechanism is officially introduced, clarifying the cornerstone position of coal and electricity. The construction of new power systems under the dual carbon target may continue to rely on the abundance and investment of system regulation methods. Furthermore, as the Development and Reform Commission increases the electricity and coal commissioner's guarantee and supply efforts, the actual compliance rate of the Electricity and Coal General Cooperation is expected to rise marginally. The bank judges that the cost side of coal and electricity companies is relatively manageable.
Galaxy Securities previously pointed out that in the context of China's energy restructuring and the continuous deepening of central state-owned enterprise reforms, the power industry is expected to continue to benefit in the future, thereby further stabilizing and enhancing its long-term investment value. In particular, driven by central state-owned enterprise reforms, power companies will create higher returns for investors by integrating resources, optimizing management, and improving efficiency. CICC also pointed out that the Hong Kong stock thermal power company released its 2023 annual report, and the performance was in line with expectations; the industry's core profit and cash flow were significantly restored, ancillary service earnings were realized, and dividend payout rates increased. They are optimistic that coal prices will fall in 2024, and Thermal Power will hit Davis in a double whammy.
Related concept stocks:
China Resources Power (00836): On January 19, China Resources Power announced on the Hong Kong Stock Exchange that in 2023, the cumulative sales volume of subsidiary power plants reached 193 million megawatt-hours, an increase of 4.7% over the previous year. Among them, the cumulative sales volume of attached wind farms reached 39.61 million megawatt-hours, an increase of 12.4% over the previous year; the cumulative sales volume of attached photovoltaic power plants reached 2.86 million megawatt-hours, an increase of 111.8% over the previous year.
Huadian International Power Co., Ltd. (01071): At the end of 2023, Guotai Junan released a research report stating that considering that Huadian International Electric Power (01071) coal power operations are stabilizing and equity installed capacity is expected to continue to grow, the company raised EPS belonging to common shareholders from 2023 to 2025 to 0.57/0.64/0.71 yuan (original value 0.52/0.61/0.65 yuan). The current stock price is 5.5 times PE (2023E). Maintain the target price of HK$5.30 and maintain the “Overweight” rating.
Datang New Energy (01798): Recently, it was announced that as of December 31, 2023, the Group has completed a cumulative total of 30.088 million megawatt-hours of power generation in 2023, an increase of 9.80% over 2022. Among them, completed wind power generation was 29.185,400 megawatt-hours, an increase of 7.44% year-on-year over 2022; photovoltaic power generation was 2,422,400 megawatt-hours, an increase of 49.22% over 2022.
Huaneng International Power Co., Ltd. (00902): According to the company's preliminary statistics, in the fourth quarter of 2023, each of the company's operating power plants in China completed feed-in capacity of 110.476 billion kilowatt-hours according to the consolidated statement caliber, an increase of 5.18%; throughout 2023, the company's operating power plants in China completed a total of 447.856 billion kilowatt-hours of feed-in electricity according to the consolidated statement caliber, an increase of 5.33%; the average online settlement price of the company's operating power plants in China was 508.74 yuan/megawatt-hour, a year-on-year decrease of 0.23%. In 2023, the proportion of the company's market-based electricity transactions was 88.40%, the same as the previous year.