Coal industry investment report: North China coal substitution market size close to 700 billion.



Environmental pressure is forced, it is imperative to reduce coal consumption in North China. Coal burning is an important factor causing winter haze in North China. Under the background of increasing environmental pressure, reducing coal consumption has gradually become the core of air pollution control policy. According to the policy plan, the proportion of coal consumption in China will drop from 63.95 percent in 2015 to 58 percent in 2020, a decrease of 6pct; the proportion of coal consumption in North China will drop from 75.72 percent in 2015 to 62.98 percent in 2020, a decrease of 13pct, significantly higher than the national level.

Three factors are pushing forward, and the 2017 policy will usher in a window period. 1) "Atmospheric Ten" ushered in the final examination year, North China, especially the Beijing-Tianjin-Hebei region is facing tremendous pressure to meet the standard; 2) environmental protection vertical reform to solve local protectionist intervention in environmental monitoring and supervision, strengthen the responsibility of government supervision and local environmental protection agencies; 3) environmental protection into the performance indicators, the assessment is increasingly strict. Under the catalysis of three major factors, the air pollution control policy in North China will usher in a window period in 2017, and the implementation is expected to be unprecedentedly strong.

The size of the coal substitution market in North China is close to 700 billion. The technical paths to reduce coal consumption are mainly "coal to gas", "coal to electricity", "coal to geothermal", "coal to light" and energy-saving transformation. Based on the analysis of the technical path, industrial chain structure and competitive landscape of the above five forms of transformation, we expect the corresponding potential market sizes to be 170 billion, 130 billion, 110 billion, 260 billion and 10 billion respectively during the 13th Five-Year Plan period; the total market size is close to 700 billion.

"Coal to gas", "coal to light" fully benefit, the focus of the recommendation of Hang pot shares, Dayuan pump industry, Jingshan light machine. From the point of view of performance elasticity, it is recommended to focus on the "coal-to-gas" sector, optimistic about the recovery of market demand for the relevant industry leaders to bring performance growth, focusing on the recommendation of waste heat boiler leader Hang pot shares, shielding pump leader Dayuan pump industry. From the point of view of performance volume, "coal to light" is the largest area of market space, it is recommended to focus on high performance certainty of enterprises, such as subsidiary Suzhou Shengcheng performance is expected to exceed expectations of Jingshan light machine.