According to reports, in order to ease the shortage of power supply in some areas, restrain the development of high-energy-consuming industries and protect people's livelihood, the National Development and Reform Commission decided that since June 1st, the average price of industrial, commercial and agricultural electricity in 15 provinces and cities will be raised by 1.67 cents per kilowatt-hour. However, the price of electricity for residents will not change;
The 15 provinces and cities involved in this sale price adjustment are Shanxi, Qinghai, Gansu, Jiangxi, Hainan, Shaanxi, Shandong, Hunan, Chongqing, Anhui, Henan, Hubei, Sichuan, Hebei and Guizhou. The highest value of sales price adjustment is 2.4 points/kWh in Shanxi Province, and the lowest is 0.4 points/kWh in Sichuan Province, with an average of 1.67 points/kWh;
In the 15 provinces and cities where the electricity price adjustment was implemented, the on-grid electricity price of 12 provinces such as Shanxi has been raised on April 10, and the on-grid electricity prices in Anhui, Hunan, and Jiangxi have been raised since June 1. The highest on-grid tariff increase was 3.09 points/kWh in Shanxi Province, and the lowest was 1.24 points/kWh in Guizhou Province, with an average of about 2 points/kWh (the previous online price adjustments were reported by previous media);
From the industry level, we believe that this on-grid tariff adjustment is a concentrated reflection of the increase in “pricing power†in the thermal power industry, and we think this is not the end but the beginning. The adjustment of the sales price is the guarantee for normal earnings of the power grid industry. It is worth noting that the value of the increase in sales price is lower than the on-grid price. This is a rare case in previous price adjustments. Grid profit has been squeezed to a certain extent.
From the macro level, we believe that on the one hand, the increase in sales price will slightly curb the energy demand of some high-energy-consuming industries, which will play a role in reducing the power gap. On the other hand, at the point in time, the slightly higher than expected sales price increase, we believe that the internal logic is that management is still not optimistic about the future inflation level, and we need to adjust the selling price in the morning so as to face the inevitable adjustment in the near future. At the time of on-grid tariffs and higher inflation levels, there is enough room for change.
In this year's two industry in-depth reports and two special meetings, we proposed the view that the thermal power industry will obtain “pricing power†and the price adjustment will continue. It is currently being verified one by one. We believe that the thermal power industry still lacks at least 8-10% of the price adjustment after the price adjustment (this time the price adjustment has been basically swallowed up by the market coal price increase). Combined with the research results of our macro team, we believe that the price of electricity is within 10%. The level of adjustment will not have a substantial impact on the inflation trend (see our macro report). In the future, the government will continue to increase the on-grid tariff and let the power shortage spread. Maintain the "overweight" rating of the power industry. Based on extremely low PB valuations and strong earnings recovery expectations, Huaneng Power International and Guodian Power will be the first to push forward.
The 15 provinces and cities involved in this sale price adjustment are Shanxi, Qinghai, Gansu, Jiangxi, Hainan, Shaanxi, Shandong, Hunan, Chongqing, Anhui, Henan, Hubei, Sichuan, Hebei and Guizhou. The highest value of sales price adjustment is 2.4 points/kWh in Shanxi Province, and the lowest is 0.4 points/kWh in Sichuan Province, with an average of 1.67 points/kWh;
In the 15 provinces and cities where the electricity price adjustment was implemented, the on-grid electricity price of 12 provinces such as Shanxi has been raised on April 10, and the on-grid electricity prices in Anhui, Hunan, and Jiangxi have been raised since June 1. The highest on-grid tariff increase was 3.09 points/kWh in Shanxi Province, and the lowest was 1.24 points/kWh in Guizhou Province, with an average of about 2 points/kWh (the previous online price adjustments were reported by previous media);
From the industry level, we believe that this on-grid tariff adjustment is a concentrated reflection of the increase in “pricing power†in the thermal power industry, and we think this is not the end but the beginning. The adjustment of the sales price is the guarantee for normal earnings of the power grid industry. It is worth noting that the value of the increase in sales price is lower than the on-grid price. This is a rare case in previous price adjustments. Grid profit has been squeezed to a certain extent.
From the macro level, we believe that on the one hand, the increase in sales price will slightly curb the energy demand of some high-energy-consuming industries, which will play a role in reducing the power gap. On the other hand, at the point in time, the slightly higher than expected sales price increase, we believe that the internal logic is that management is still not optimistic about the future inflation level, and we need to adjust the selling price in the morning so as to face the inevitable adjustment in the near future. At the time of on-grid tariffs and higher inflation levels, there is enough room for change.
In this year's two industry in-depth reports and two special meetings, we proposed the view that the thermal power industry will obtain “pricing power†and the price adjustment will continue. It is currently being verified one by one. We believe that the thermal power industry still lacks at least 8-10% of the price adjustment after the price adjustment (this time the price adjustment has been basically swallowed up by the market coal price increase). Combined with the research results of our macro team, we believe that the price of electricity is within 10%. The level of adjustment will not have a substantial impact on the inflation trend (see our macro report). In the future, the government will continue to increase the on-grid tariff and let the power shortage spread. Maintain the "overweight" rating of the power industry. Based on extremely low PB valuations and strong earnings recovery expectations, Huaneng Power International and Guodian Power will be the first to push forward.
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