Event
National Energy Administration released data including national power consumption of Jan 2010 on 12nd Feb, 2010.
Our Analysis and Estimation
1) Power consumption saw high growth.
Monthly power consumption hit historical high, of which that of the secondary industry saw year-on-year growth of 46% and peculiarly that of heavy industry experienced year-on-year growth of 50%. “Spring Festival” is one of the causes for this large rise, but this rocketing increase of Jan 2010 still shows active status of industrial production.
2) Hydropower generated insufficient production while thermal power maintained relatively productive.
High growth in power consumption drives improvement of utilization factor of generating equipment. In the first month of 2010, average utilization hour of national generating equipment rose by 28% yoy. During the period under view, hydropower saw insufficient production while thermal power maintained relatively productive due to dry climate, and average utilization hour of national generating equipment saw year-on-year growth of 36%.
3) Coal price maintained high in January 2010, while began to fall back in the following month.
In Feb 2010, raising impetus of the power coal weakened and began to fall back. We predict this trend will be more obvious in March 2010.
Investment Suggestion
In spite of unsatisfactory earning performance of thermal power industry in Jan 2010, industrial key driving element is expected to turn better. We maintain “Cautious” rating for the counter and continue recommending companies including GD Power Development Company (600795), Guangzhou Hengyun Enterprises Holding (000531), China Yangtze Power (600900) and Yunnan Wenshan Electric Power (600995).