亚太地区-煤电公用事业行业-中国煤电能源：煤炭价格疲软的买入机会

Simon.Lee@morganstanley.comEva.Hou@morganstanley.comValena.Hsu@morganstanley.comAttractiveMORGAN STANLEY ASIA LIMITED+Simon H.Y. Lee, CFAEQUITY ANALYST+852 2848-1985Eva HouEQUITY ANALYST+852 2848-6964Valena HsuRESEARCH ASSOCIATE+852 2239-7687China UtilitiesAsia PacificIndustryViewChina – Coal Power UtilitiesChina – Coal Power Utilities || Asia Pacific Asia PacificBuying opportunity on coal priceweaknessStrong rainfall/hydropower in southeastern China is driving~10% yoy coastal coal price weakness – creating a buyingopportunity at trough valuations.WHAT'SCHANGED China Resources Power (0836.HK)FromToPrice TargetHK$17.62HK$15.00Huaneng Power (0902.HK)RatingEqual-weight OverweightPrice TargetHK$5.79HK$5.90Huadian Power Int'l (1071.HK)Price TargetHK$3.81HK$3.66Datang Int'l Power (0991.HK)Price TargetHK$2.30HK$2.13Huaneng Power (600011.SS)RatingUnderweight Equal-weightPrice TargetRmb4.75Rmb7.02Huadian Power Int'l (600027.SS)Price TargetRmb3.12Rmb4.35Datang Int'l Power (601991.SS)Price TargetRmb2.64Rmb3.44Seasonal and structural coal demand weakness; coastal coal price fell 10% yoyin 1Q19: We expect coastal China's coal power demand growth to slow, due toenergy-intensive industries migrating, more power imports and air pollution/coalconsumption control. The China Meteorological Administration (CMA) expectsrainfall to be stronger than normal in summer 2019, due to El Niño – rainfall in1Q19 was 17% higher than normal. We expect weak coal power demand insouthern and eastern China, and cheap coal imports, resulting in weak coalprices. We note that the CCCI fell 8.5% yoy in March 2019, and the seaborne coalprice fell 5-10% yoy more than inland.Expect no tariff cut; power grid to bear the cost: China has announced anotherannual cut in General C&I tariff, by 10%, for 2019, which we expect to amount toRmb70-80b. We expect the bulk of these savings to come through power grids'VAT reductions (Rmb41b), removal of surcharges (Rmb21.4b), and further cutsfrom cost audits at power grids, with no impact on coal power tariffs. Similar to2018, only six provinces have announced slight cuts in coal IPP tariffs. We notethat recently the market power tariff has rebounded, with the Guangdong tariffdiscount now at a 3-year low. (cont'd on next page)Exhibit 1: What's ChangedH-shareRatingH-share PTA-shareRatingA-share PTNet Profit2019E2020E2021E2019E2020E2021E(HKD)(Rmb)CRP(HK$ m)(HK$ m)(HK$ m)(HKD)(HKD)(HKD)NewOW15.00N/AN/A7,1418,8489,5561.481.841.99OldOW17.62N/AN/A9,47711,42012,0701.972.372.51% from old-14.9%-24.6%-22.5%-20.8%-24.7%-22.5%-20.8%Huaneng(Rmb m)(Rmb m)(Rmb m)(Rmb)(Rmb)(Rmb)NewOW5.90EW7.026,0406,4916,9230.380.410.44OldEW5.79UW4.755,7166,4637,7150.380.430.51% from old1.9%47.8%5.7%0.4%-10.3%2.3%-2.7%-13.1%Huadian(Rmb)(Rmb)(Rmb)NewEW3.66UW4.353,0733,3563,6560.310.340.37OldEW3.81UW3.123,3833,5323,6790.340.360.37% from old-4.0%39.5%-9.2%-5.0%-0.6%-9.2%-5.0%-0.6%Datang(Rmb)(Rmb)(Rmb)NewEW2.13UW3.443,5974,0654,5110.190.220.24OldEW2.30UW2.644,2564,4264,8970.230.240.26% f