Hydroelectric power industry may usher in opportunities

According to the report on excellence in financial analysis, the electricity consumption in July increased by 13.9% year-on-year, and the growth rate maintained a slight decline.

In July 2010, the electricity consumption of the whole society was 389.6 billion kWh, a year-on-year increase of 13.9%, and the growth rate was slightly down from 14.1% in June. However, compared with the average growth rate of more than 20% in the first half of the year, the decline rate was still very high. Obviously; the ring increased by 10.7%.

The contribution of industrial electricity demand to the total electricity demand of the entire society in July was 80.9%, which was 1.9 percentage points lower than that in June. The output of the four major energy-consuming industries has obviously declined, and the impact of macro-control policies has begun to deepen. However, the July figure was only slightly lower than the 15.7% in June, better than previous expectations. This is mainly due to the fact that the high-temperature weather in July raised the demand for refrigeration power by various industrial enterprises, making the industrial electricity consumption increase by 8.4% from the previous month, much higher than the data in June.

The tertiary industry used electricity of 40.6 billion kWh, an increase of 11.3% year-on-year; the urban and rural residents' electricity consumption was 43.7 billion kWh, an increase of 8.6% year-on-year. Since the temperature in July was significantly higher than that in June, although the year-on-year growth rate still declined slightly, the peak of summer electricity consumption made the contribution of electricity to the tertiary industry and residents' electricity consumption increase significantly compared with June, which is also July. One of the reasons for the slowdown in electricity growth slowed.

Hydropower utilization continues to increase

In July, the average utilization hours of power generation equipment of 6000 kilowatts and above in China was 424 hours, which was an increase of only 5 hours year-on-year, but a significant increase of 35 hours from the previous month; cumulative use of 2719 hours from January to July, an increase of 195 hours year-on-year. Consistent with the author's previous judgments, as the electricity demand side was limited by macro-control policies, the increase in utilization hours in the second half of the year has dropped from 30-40 hours in a single month to the current 3-5 hours, showing a significant drop.

The utilization hours of hydropower generating units continued to maintain a good rebound momentum. In July, the monthly rate was 431 hours, an increase of 44 hours year-on-year and a 55-hour increase compared with the previous period. From January to July, the accumulative total was 1,850 hours, and the decrease from the same period last year narrowed to 78 hours.

With the advent of the rainy season, the utilization hours of hydropower are gradually returning to normal, and this year's water supply during the wet season is significantly better than last year. The sharp increase in July's data has reduced the cumulative utilization hours to 4.1%. The author believes that the utilization of hydropower in the third quarter will have a major reversal, and its performance will be improved. In terms of thermal power, due to the adjustment of macroeconomic policies and the recovery of hydropower output, the growth rate of utilization hours in the third quarter will have a certain degree of decline.

According to the analysis at the industry level, we still maintain a “neutral” rating for the power industry. However, due to the improvement of the water supply situation, it will clearly benefit the production of hydropower companies. In the third quarter, hydropower will usher in the best opportunity for the year. Therefore, we raised our rating on the water electronics industry to "overweight."

In the first half of the year, hydropower companies in Yunnan, Guizhou, and Guangxi are affected by droughts. Hydropower companies in Sichuan and Hubei are also affected to a certain extent. Therefore, we recommend hydropower companies that have suffered serious droughts in the first half of the year and have improved water availability in the second half of the year, such as Yangtze Power, Wuyuan Power, Wenshan Power, and Xichang Power. In addition, they can focus on star power in their own power grids. Secondly, thermal power companies with power environmental protection businesses, such as Jiulong Power, Shenzhen Energy, etc., can also pay due attention.