Founder: The expected decrease in coal prices may lead to a long-term increase in the performance of thermal power plants. It is recommended to pay attention to electricity companies with high dividends and enterprises experiencing a turnaround in difficulties.

Founder released a research report stating that the decline in coal prices brings down the cost of thermal power generation. Utilities belong to a sector with relatively stable performance, and the current decline in coal prices is expected to bring long-term growth in performance. The firm chooses companies with high dividend payout ratios, as these companies' dividend yields are expected to increase. The market's expectations for the thermal power sector are gradually changing, so investors can focus on high dividend electricity companies. Additionally, due to the long-term pressure on the performance of thermal power companies, the firm is also paying attention to companies that may benefit from the current decline in coal prices. Key points from Founder: - Recent coal price trend turned downwards - The port price of 5500 kcal coal has fallen below 700 yuan/ton, leading to a decline in profits for coal mines. However, for thermal power companies, the drop in coal prices has reduced their costs, especially for thermal power plants in regions where electricity prices have decreased less. In the first half of 2024, the coal sector saw a revaluation of value under the "dividend" logic, as both coal and thermal power belong to this sector. The current decline in coal prices may result in a significant increase in the dividend yield of thermal power companies, allowing them to ride the "dividend" express. - The easing of safety production in the second half of 2024, along with the opening up of annual coal imports, led to a rapid decline in coal prices at the end of the year. - The decline in coal prices brings down the cost side for thermal power generation - The fuel cost accounts for nearly 70% of the cost of thermal power generation, and the drop in coal prices has a clear positive impact on the profits of thermal power plants. Using 300 grams of standard coal consumption per kWh as a benchmark, a one-cent fluctuation in the cost of electricity corresponds to a standard coal price fluctuation of 33.3 yuan/ton, corresponding to a fluctuation of 26.2 yuan/ton in the price of 5500 kcal coal. Assuming the average price of Qin port Q5500 coal drops by 150 yuan/ton in 2025, the cost of electricity will decrease by 5.7 points if the price of coal purchased from the market changes accordingly. - In some provinces with power shortages, the decline in electricity prices is smaller than the decline in costs - The market's expectations for the thermal power sector are gradually changing, and investors can focus on high dividend electricity companies Risk warning: Uncertainty in downstream demand, risk of declining electricity prices, risk of projects not meeting expected progress, risk of coal price fluctuations, and policy uncertainty.