中国煤炭业：煤炭价格下跌背景下是否还有价值

1、GlobalResearch9 December 2019EquitiesChina coal sectorEquitiesCoalChinaIs there value in a falling coal price environment?CoalChinaWe expect further pressure on China coal prices in 2020WebelievetheChinacoalsectorwillfacefurtherpressurefrompotentialnewsupplyin 2020. We therefore think China thermal

2、coal prices (QHD/Bohai 5500K FOB) could declinefurther,toRmb530/t,in2020andhoveratthislevelforthenextfewyears.As aresult,welowerour2020earningsestimatesforcoalcompaniesunderourcoverage 20-30%.WevaluecoalcompaniesusingaP/BV/ROEmethodology.Wemaintainour BuyratingsforYanzhouCoalandShaanxiCoalafterourea

3、rningscuts,asweconsider generalvaluationsundemanding.WemaintainourNeutralratingonChinaShenhua-H andupgradeChinaShenhua-AfromSelltoNeutral,afterbenchmarkingourestimated P/BV/ROE average versus the historicalaverage.High coal capex growth should imply more supply in 2020Fixedassetinvestment(FAI)intoth

4、ecoalsectorhasacceleratedin2019(up26%YoY in10M19)andcoalproductionhasrisen4.5%YoYoverthesameperiod.Wethinkthe faster-than-expected FAI growth could continue to boost coal production, which we expect to rise 3.4% YoY in 2020, while demand could grow only 0.7% YoY. Chinas coal supply/demand balance sh

5、ould therefore deteriorate and further pressure coal prices.However,wethinkcoalcapexmightslowin2020andpricescouldstabilisefor two to three years from late 2020.Policies should mitigate coal price declinesThecoalindustrystillcontributessignificanttaxrevenuetolocalgovernments,andwe think governments m

6、ight continue to restrict production to reduce the effective supply ofcoal.Aswehavenoted,governmentsappeartohaveusedenvironmentalchecksto positively influence coal prices (link). Import policies should also help to control coal import volume and further restrict effective coal supply. We therefore t

7、hink the QHD coalpricewillstarttostayinthegreenrange(Rmb500-570/t)setbytheNDRCin2020.Maintain most ratings due to undemanding valuationsWe have factored in our new QHD price forecasts and cut our earnings estimates (Figure 1). After these changes, coal companies 2020E PE and P/BV/ROE remain generall

8、yundemanding.Wecontinuetobelieveinvestorsaregenerallytoobearishon the sector, judging by valuations. When coal prices start to correct meaningfully, investorsmightperceivethatdownsideriskisbeingrealisedandre-visitthesector.Our top pick remains Yanzhou Coal, given its valuations are most undemanding

9、and managements efforts to lift dividend payout for investors.Figure 1: China coal sector valuationsJamesKan HYPERLINK mailto:james.kan +852-29716334HanZhang HYPERLINK mailto:han.zhang +852-29718674DavidWei HYPERLINK mailto:david.wei +86-213-8668842WenzhuoDu HYPERLINK mailto:wenzhuo.du +852-37122545

10、2020E NPAT (UBS)20202020E RatingPrice Price Target (LC) Mktcap P/BV(x) ROE(%) P/E(x) (Rmbm)div TickerNewOld(LC)NewOldUS$ m 2019E 2020E 2019E 2020E 2019E 2020ENew %Change(Rmb m) yield%Yanzhou Coal1171.HKBuy6.757.9610.744,235,335-27%7,7479.0China Shenhua1088.HKNeutral15.1014.8916.3638,3610.8

11、0.712.89.06.08.232,826-18%42,6966.1H-share avg.0.70.615.0Shaanxi Coal601225.SSBuy8.419.6511.3211,958,490-27%11,4234.0China Shenhua601088.SSNeutralSell17.2916.8148,5611.00.911.39.09.010.731,932-20%43,5124.7A-share Avg.Above data as of 6 December 2019. Source: Company data, Datastream, UBS e

12、stimates HYPERLINK /investmentresearch /investmentresearchThisreporthasbeenpreparedbyUBSSecuritiesAsiaLimited. ANALYSTCERTIFICATIONANDREQUIREDDISCLOSURESBEGIN ONPAGE34. UBSdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbe aware that the firm may have a conf

13、lict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.China Coal SectorUBS Research THESIS MAP a guide to our thinking and whats where in this reportMOSTFAVOUREDLEAST FAVOUREDYanzhouCoalShe

14、nhuaEnergy-APIVOTALQUESTIONSQ: Will the coal supply/demand balance ease in2020?No. The ongoing high FAI into the coal sector has boosted China coal production YTD. We are concerned that FAI into the sector could continue to rise rapidly in 2020, further increasing coal production, while demand could

15、 rise only slightly. We therefore believe China thermal coal prices will correct to Rmb530/t in 2020 (we previously estimated Rmb580/t), driven by the potential increase in coal supply, and could hover around the same level for two to three years. HYPERLINK l _bookmark1 moreQ: Would the Chinese gove

16、rnment seek to support coal prices if supply surges?Yes.Webelievethegovernmentwouldhaveincentivestomitigatecoalpricedeclinesbecausethe coalindustrystillprovidessignificanttaxrevenuetolocalgovernments.Webelievethegovernment could continue to restrict coal production through environmental checks to re

17、duce the effective supplyofcoal.Itcouldalsoannounceimportpoliciestorestrictsuppliesofoffshorecoal. HYPERLINK l _bookmark2 moreUBSVIEWChinacoalsupply/demandhasloosenedin2019,mainlyduetohigher-than-expectedgrowthinFAI intothecoalsectorandcoalproduction.WeareconcernedthatFAIintothesectorcouldcontinue t

18、o grow rapidly in 2020, and widen the over-supply balance. However, the government has incentivestorestricttheeffectivesupplyofcoalthroughenvironmentalchecksandimportpolicies, asithasinthepast.Overall,weexpecteffectivecoalsupply/demandtoincrease1.4%/0.7%YoYin 2020.EVIDENCECoal oversupply could conti

19、nue in 2020 based on our analysis of FAI into the industry, inventory levels, property sector movements, and non-financial capex, while local government should have incentives to mitigate coal price declines as coal producers remain an important source of tax revenue for local governments.WHATSPRICE

20、DIN?Webelieveinvestorsexpectcoalpricestocontinuetofallin2020.ForYanzhouCoal,investorsmay be factoring in a coal price of about Rmb500-510/t, while we forecast Rmb530/t. For Shenhua Energy, we think investors may be factoring in a coal price of about Rmb530/t, aligned with our forecast. Looking at 20

21、20E PE and P/BV/ROE (Figure 14), we believe company valuations are undemandingoverallandthatthemarketmightbetoobearishonthesector. HYPERLINK l _bookmark3 moreRMB/tQ4-2010Q4-2010QHD5500kcFOB(VATincl.)(LHS)QHDFOBquarterlyforecastBohai5500kcFOB(VATincl.)(RHS)Bohai5500kcFOBforecast(RHS)RMB/t850750650550

22、450Q4-2020Q2-2021Q4-2021350Q4-2020Q2-2021Q4-2021Q2-2011Q4-2011Q2-2012Q4-2012Q2-2013Q4-2013Q2-2014Q4-2014Q2-2015Q4-2015Q2-2016Q4-2016Q2-2017Q4-2017Q2-2018Q4-2018Q2-2019Q4-2019Q2-2020Source: Wind, UBS estimatesQ2-2011Q4-2011Q2-2012Q4-2012Q2-2013Q4-2013Q2-2014Q4-2014Q2-2015Q4-2015Q2-2016Q4-2016Q2-2017Q

23、4-2017Q2-2018Q4-2018Q2-2019Q4-2019Q2-2020ChinaCoalSectorUBSResearchPIVOTALQUESTIONS HYPERLINK l _bookmark0 return Q: Will the coal supply/demand balance ease in 2020?UBSVIEWNo. The ongoing high FAI into the coal sector has boosted China coal production YTD. We are concerned that FAI into the sector

24、could continue to rise rapidly in 2020, further increasing coal production, while demand could riseonlyslightly.WethereforebelieveChinathermalcoalpriceswillcorrectto Rmb530/tin2020(wepreviouslyestimatedRmb580/t),drivenbythepotential increase in coal supply, and could hover around the same level for

25、two to three years.EVIDENCEFAI into the coal sector might continue to lift coal supply in 2020.Coal demand growth could slow in 2020, pressured by hydro power generation,lowersteelproduction,aslowingmanufacturingcapexcycle, and high coal inventories.WHATS PRICED IN?Webelieveinvestorsexpectcoalprices

26、tocontinuetofallin2020.Judgingby coal companies valuations, we believe investors are factoring in a coal price range of Rmb500-530/t.FAIintothesectormightcontinuetoliftcoalsupplyFAI into the coal sector (a proxy for total capex by China coal producers) has acceleratedfasterthanexpectedin2019(rising2

27、6.9%YoYasof10M19).Weare concernedthatthecontinuedFAIgrowthsince2018mightbesimilartothecapex boom cycle in 2007-11, which resulted in a significant coal price downcycle. Looking at FAI in 2011-12 (the early stage of the coal price correction cycle), we think 2020 FAI growth in the sector might be nea

28、r the 7% YoY growth in 2012. AscoalproductionYTDhasrisenonlybyasingledigit(belowthedouble-digitFAI acceleration YTD), there is a risk the FAI growth in 2019 will feed through to higher 2020 coal production.Figure 2: YoY change in implied capex in China coal industry vs. QHD 5500kcal FOB price40%30%2

29、0%23.7%33.0%FAI YTDYoY%(LHS)QHD FOB price 27.4% 23.8%25.9%26.9%RMB/t850750-10%-20%-30%7.7%-2.0%-9.5%-14.4%-24.2%-12.3%5.9%7.0%650550450350200720082009201020112012201320142015201620172018 2019YTD 2020ESource: NBS, Sxcoal, UBS estimatesWeexpectcoaldemandtogrowslowlyin2020Per Sxcoal, coal demand from t

30、he power sector increased only 2% in 9M19,with thermal power generation up merely 1% over the same period. Hydro power generationhasgrownfasterthanexpectedin2019andcouldcontinuetopressure thermal coal power generation. Meanwhile, the potential growth of coal-fired generation in the coming few years

31、could support coal consumption in the power segment(seethenotesbyKenLiuandAlexLiu).Wethereforethinkcoaldemand fromthepowersectormightgrowmoreslowly(1%YoY)in2020(Figure13).Figure 3: Thermal powergeneration(monthly)Figure 4: Hydro power generation (monthly) vs.damreservoir changewhbn KThermalpowergene

32、rationYoY 550wh500450400350300250200Oct-2013 Apr-2014 Oct-2014 Apr-2015 Oct-2015 Apr-2016 Oct-2016 Apr-2017 Oct-2017 Apr-2018 Oct-2018 Apr-2019Oct-2019Oct-2013 Apr-2014 Oct-2014 Apr-2015 Oct-2015 Apr-2016 Oct-2016 Apr-2017 Oct-2017 Apr-2018 Oct-2018 Apr-2019Oct-201920%15%10%5%0%-5%-10%-15%-20%60%50%

33、40%30%20%10%0%-10%-20%Damreservior30-daymeteravgYoY(RHS) Hydro power YoY(LHS)meter151050-511/201105/201211/201105/201211/201205/201311/201305/201411/201405/201511/201505/201611/201605/201711/201705/201811/201805/201911/2019Source: NationalBureauofStatisticsSource: National Bureau of StatisticsUBSs C

34、hina property team expects new starts to drop 3% YoY in 2020 (link). Slowerconstructionactivitywouldaffectcokingcoaldemandfromthesteelsector and thermal coal demand from metallurgy, which accounts for about 20% of total China coal demand (Figure 13).Figure 5: Property new starts vs. property sales-1

35、0%-20%Oct-2010-30%Oct-2010Chinamonthlynewstarted6MMAYoY(LHS)China monthly floor space sold 6MMA YoY(LHS)Apr-2011Oct-2011Apr-2012Oct-2012Apr-2013Oct-2013Apr-2014Oct-2014Apr-2015Oct-2015Apr-2016Oct-2016Apr-2017Oct-2017Apr-2018Oct-2018Apr-2019Oct-2019Source: NBS, WINDApr-2011Oct-2011Apr-2012Oct-2012Apr

36、-2013Oct-2013Apr-2014Oct-2014Apr-2015Oct-2015Apr-2016Oct-2016Apr-2017Oct-2017Apr-2018Oct-2018Apr-2019Oct-2019Manufacturing could continue to face profit pressure, due to the ongoing slowdowninthemanufacturingcapexcycle.Therecouldalsobeadditionalimpact from the US-China trade war.Figure 6: Non-financ

37、ial capex vs. net margin changes YoY35%30%25%20%15%10%-5%Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Q319Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411

38、 Q112 Q212 Q312 Q412 Q113 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218 Q318 Q418 Q119 Q219 Q3192.0%Non-financialNon-financialcapexgrowthyoy(LHS) NetmarginchangesYoY(RHS)1.0%0.5%0.0%-0.5%-1.0%-1.5%-2.0%Source: NBS, PBOCFigures 7-8 show that

39、coal inventory levels in general have been rising in Q419:coalinventorydaysatmainindependentpowerproducers(IPPs)areapproaching thehistoricalhighsince2012;coalinventoryatmajorportsinChinahasreacheda post-2016 high. This could indicate that Q419 demand has been weaker than expected. We therefore lower

40、 our Q419 QHD coal price forecast to about Rmb550/t.Weareconcernedthisinventorytrendcouldcontinuein2020.Figure 7: Coal inventory days atmainIPPsFigure8:CoalinventoryatmajorportsinNorthernChinaAvg: 20 daysDaysInventorydays34Avg: 20 days3026221814mt Avg: 19.4mt32Coalinventoryatmajorports 27Avg: 19.4mt

41、22171211/201105/201211/201205/201311/201105/201211/201205/201311/201305/201411/201405/201511/201505/201611/201605/201711/201705/201811/201805/201911/201905/201508/201511/201502/201605/201608/201611/201602/201705/201708/201711/201702/201805/201808/201811/201802/201905/201908/201911/2019Source:SxcoalS

42、ource: SxcoalChinaCoalSectorUBSResearchPIVOTALQUESTIONS HYPERLINK l _bookmark0 return Q: Would the Chinese government seek to support coal prices if supply surges?UBS VIEWYes.WebelievetheChinesegovernmentwouldhaveincentivestomitigatea coal price decline. It could so by: 1) restricting coal productio

43、n through environmentalchecks;and2)adjustingimportpoliciestocontrolthesupplyof offshore coal.EVIDENCEThe coal industry remains a significant source of tax revenue for local governments.Environmental inspections have helped to keep coal priceselevated.The Chinese government could adjust coal import p

44、olicies to control the supply of offshore coal.WHATS PRICED IN?We believe investors expect coal prices to continue to fall in 2020. Judging from coal companies valuations, we believe investors are factoring in a coal price range of Rmb500-530/t.Whilepotentialproductiongrowthin2020couldpressureChinac

45、oalprices,local governmentsstillhaveincentivestosupportcoalprices,inourview(seeoursector initiationnote).Coalproducersremainanimportantsourceoftaxrevenueforlocal governments (Figure 9). In Shanxi and Inner Mongolia, about 30-40% of government tax revenue comes directly from the coal industry. If we

46、considerthe indirect tax implications, the industrys contribution to tax revenue in Shanxi and Inner Mongolia could be even higher, in our view.Figure 9: Coal sector contribution to local government tax revenueRegionPeriodTotal tax revenue(Rmbbn)Tax revenue from coal sector (Rmb bn)UBSest.%oftotalta

47、x revenueShanxi2013189*5730+%H118170*6941%H1191927740%Inner Mongolia20172405523%20182456225%10M192327131%Shaanxi201844149*11% (Note 1)2019E459*51*11% (Note 1)*RecalculatedbyUBSbasedonmediareports. Note1:InShaanxi,weusethecoalsectorspercentageoftotal taxandotherassociatedchargesin2015asaproxyforthese

48、ctorspercentageoftotaltaxrevenue.Source: Media reports, WINDAs shown in Figure 10, nationwide and local environmental inspections have helped to keep coal prices elevated. We therefore believe local governments will continue to limit coal supply in order to support coal prices to keep tax revenue st

49、able.Source: WIND, media reportsWe also think the government could continue to announce import policies to stabilisecoalprices.InNovember2019,QHDthermalcoalpricesdecreasedtothe lowest level since late 2016. According to industry news websites more ports recently received notices to delay/suspend cus

50、tom declarations of importedcoal. Theimpactofthisremainstobeseenduetotheinspectionleadtime.ConclusionWe believe the coal supply/demand balance will be looser in 2020 than in2019E (Figure 13) due to the aforementioned factors. Torecap:Coal supply could increase further in 2020 due to faster-than-expe

51、cted FAI growth in coal production;Demand could increase slowly in 2020, pressured by hydro powergeneration, lower steel production, the slowing manufacturing capex cycle, and high coal inventories.Tosecuretaxrevenuefromcoalcompanies,thegovernmentcouldcontinueto use policies to support coal prices.

52、We think coal prices will stabilise in thegreen range of Rmb500-570/t set by Chinas National Development and Reform Commission (NDRC).WethereforeestimatecoalpriceswilldroptoRmb530/tin2020andhoveraround the same level for the next few years (Figures 11 and12).Figure 11: QHD and Bohai FOB 5500kcal (VA

53、T incl.) price summaryRmb/t20182019E2020E2021EQHD5500kcFOB(VATincl.)649588530540Q118Q218Q318Q418Q119Q219Q319Q419E708623636630602609586555Rmb/t20182019E2020E2021EBohai 5500kc FOB (VAT incl.)571575530540Q118Q218Q318Q418Q119Q219Q319Q419E575571568571574578577570Source: WIND, UBS estimatesRmb/t2020202053

54、0FY21 avg: 540800700600500400QHD5500kcFOB(VATincl.)(LHS)QHDFOBquarterlyforecast(LHS) Bohai5500kcFOB(VATincl.)(RHS)Bohai5500kcFOBforecast(RHS)Rmb/t850750650550450Q4-2010Q2-2011Q4-2011Q2-2012Q4-2012Q2-2013Q4-2013Q2-2014Q4-2014Q2-2015Q4-2015Q2-2016Q4-2016Q2-2017Q4-2017Q2-2018Q4-2018Q2-2019Q4-2019Q2-202

55、0Q4-2020Q2-2021Q4-2021300350Q4-2010Q2-2011Q4-2011Q2-2012Q4-2012Q2-2013Q4-2013Q2-2014Q4-2014Q2-2015Q4-2015Q2-2016Q4-2016Q2-2017Q4-2017Q2-2018Q4-2018Q2-2019Q4-2019Q2-2020Q4-2020Q2-2021Q4-2021Source: WIND, UBS estimates20152016201720182019E2020E2021EChina raw coal production3,7473,3643,4453,5463,6523,7

56、763,807Vol. change(127)(383)8210010612430% YoY-3.3%-10.2%2.4%2.9%3.0%3.4%0.8%Estimated China commercial coal supply3,5103,1903,3203,4633,5433,6443,658% YoY-9.1%4.1%4.3%2.3%2.9%0.4%Thermal coal3,0272,7542,8743,0093,0643,1633,175Met coal483436446454478481483Net imports199247263276315268236Thermal coal

57、152189195213246205184Met coal47586763696252Total effective supply (net imports incl.)3,7093,4373,5833,7393,8583,9123,894% YoY-10.8%-7.3%4.2%4.4%3.2%1.4%-0.5%Demand supply gap (Inventory adj.)(18)(191)(79)1117433Total coal (thermal + met) demand3,7273,6283,6623,7293,8403,8693,891% YoY12.3%-2.6%0.9%1.

58、8%3.0%0.7%0.6%Total thermal coal consumption3,1993,0943,1483,2183,2933,3263,356% YoY1.7%-3.3%1.7%2.2%2.3%1.0%0.9%PowerThermal coal consumption for power (mmt)1,7571,8191,8811,9712,0182,0382,058% YoY-11%4%3%5%2%1%1%CementThermal coal consumption for cement (mmt)311315314283301293284% YoY-6%1%0%-6%7%-

59、3%-3%ChemicalThermal coal consumption for chemical (mmt)161162179175191210232% YoY1%11%-2%9%10%10%M etallurgy-thermal coal demandThermal coal consumption for metallurgy (mmt)136139144154163165162% YoY-7%2%4%7%6%1%-2%HeatingThermal coal consumption for heating (mmt)198220232265257257257% YoY11%5%15%-

60、3%0%0%OthersThermal coal consumption for others (mmt)636439398370363363363% YoY-31%-9%-7%-2%0%0%Metallurgy-met coal demand (mmt)528534515511548543535% YoY-16%1%-4%-1%7%-1%-2%Historical price & price forecastsQHD 5500kcal RMB/t (FOB, VAT incl.)412473635649588530540YoY-10%2%Bohai 5500kcal RMB/t (FOB,