Despite Gloomy Outlook for Coal, CRP Is Better Positioned Amid Faster Transition to Greener Fuel Mix

The share prices of the coal-fired independent power producers, or IPPs, have underperformed the broader market since the beginning of October despite China’s electricity consumption continuing its robust recovery, China Resources Power’s, or CRP’s, share price has fallen about 8% compared with the Hang Seng Index’s 13% rise. We think this reflects market concern over the recent rise in coal prices, which remains above CNY 600 per metric ton since October and is approaching CNY 700 currently, compared with an average of CNY 552 in the first three quarters. In addition, China’s “net zero” emission target in 2060 could double China’s renewable capacity and dampen the demand for coal-fired power.