Sealand: Resilient Growth in Total Electricity Demand Maintains "Recommended" Rating for Coal Mining Industry

Sealand released a research report stating that emerging industries have a strong driving force on the electricity consumption of related sectors. The total growth of electricity demand remains resilient, and in the short term, the intermittent nature of wind power determines that the peak shaving function of coal power cannot be ignored. The demand for coal in power generation is rigid, and high-quality coal assets still have allocation value. Top coal enterprises have high asset quality, ample cash flow, and exhibit the characteristics of "high profitability, high cash flow, high barriers, high dividends, and high safety margins." It is recommended to grasp the value attributes of the low-position coal sector and maintain a "recommended" rating for the coal mining industry. In terms of thermal coal targets, the focus is on stable and elastic targets. The main points of Sealand are as follows: Primary Industry: High growth rate, low proportion, electrification drives steady growth From 2019 to 2025, the electricity consumption of the primary industry will increase to 149.4 billion kilowatt-hours at a CAGR of 11.46%. In 2025, the year-on-year increase is 9.9%, accounting for 1.44%. The incremental contribution rate fluctuates around 2%, with limited impact on overall electricity consumption but impressive growth rate. Livestock is the core driving force in the sub-industry, with the growth rate of animal husbandry machinery power significantly higher than the overall level of agriculture. It is expected that under the promotion of rural power grid renovation projects, electricity consumption will continue to show a high growth trend. Secondary Industry: Still the main electricity consumer, internal structure optimization taking effect From 2016 to 2025, the electricity consumption of the secondary industry will increase to 6.64 trillion kilowatt-hours at a CAGR of 5.19%. In 2025, the year-on-year increase is 3.7%, accounting for 64.01% and remaining the main electricity consumer in society. The incremental contribution rate center is 54%. The internal structure has been optimized, with high-tech and equipment manufacturing gradually replacing the four major energy-intensive manufacturing sectors as the growth core - the computer communication electronics, electrical machinery, and automobile manufacturing sectors all have a CAGR of over 10% from 2018 to 2025, driven mainly by the rapid development of artificial intelligence, new energy vehicles, and new energy generation, pushing up the electricity consumption of the manufacturing side; while the four major energy-intensive industries have declined in proportion due to the sluggish real estate sector and capacity optimization, with internal growth rates also showing differentiation. Tertiary Industry: Incremental contribution climbing, emerging industries as core engines From 2016 to 2025, the electricity consumption of the tertiary industry will rapidly increase to 1.99 trillion kilowatt-hours at a CAGR of 10.73%. In 2025, the year-on-year increase is 8.2%, accounting for 19.23%. The incremental contribution rate has risen to 30.89%, becoming an important driver of overall electricity consumption growth. The growth momentum mainly comes from two sub-industries: 1) wholesale and retail industries driven by the rapid penetration of new energy vehicles leading to high growth in electricity demand, with a CAGR of 12% from 2018 to 2025; 2) the information transmission, software, and information technology services industry driven by the rapid development of artificial intelligence resulting in high growth in data center electricity consumption, with a growth rate of up to 17% in 2025. Urban and rural residents' electricity consumption: Driver of terminal electrification penetration and temperature factors From 2016 to 2025, the electricity consumption of urban and rural residents will increase to 1.59 trillion kilowatt-hours at a CAGR of 7.81%. In 2025, the year-on-year increase is 6.3%, accounting for 15.32%. The incremental contribution rate fluctuates around 18%, with a high contribution rate of 50.03% in 2022 due to extreme weather conditions and increased home scenarios. The important factors driving growth include terminal electrification penetration - the widespread use of household appliances in rural areas and the rapid increase in the number of private charging piles, as well as the amplification of the impact of temperature factors on electricity consumption, leading to a sharp increase in electricity demand in summer. From 2010 to 2025, the proportions of electricity consumption in the primary, secondary, and tertiary industries, as well as urban and rural residents' electricity consumption, as a percentage of total social electricity consumption, will change by -0.88pct/-10.87pct/+8.57pct/+3.19pct to 1.44%/64.01%/19.23%/15.32%. According to calculations, excluding extreme weather conditions, in 2026, the electricity consumption of the primary/secondary/tertiary industries and urban and rural residents is expected to increase by +10.0%/+3.6%/+8.4%/+6.5% respectively, with total social electricity consumption increasing by 5.1% year-on-year. Overall, the growth in electricity demand remains resilient in terms of total volume, and the structural growth engine of electricity consumption continues the trend of transitioning from traditional industry to high-end manufacturing and modern service industries. Risk warning: 1) Risk of coal import impact; 2) Risk of calculation error; 3) Risk of continuous substitution of renewable energy; 4) Risk of accelerated energy storage development; 5) Risk of focusing on companies' performance falling short of expectations; 6) Risk of macroeconomic downturn.