Impact of Declining Coal Prices on the Differentiation of Investment Value Among Different Types of Power Stocks

The expectation of declining coal prices directly affects the investment value of different types of companies in the power industry. Pure thermal power companies (without coal mine assets) mainly rely on external coal procurement for power generation fuel. A drop in coal prices will directly reduce their production costs and improve profitability, so they are favored by the market—for example, the share prices of companies like Wanneng Power and Jingneng Power have risen [0]. For power stocks holding coal assets, their business includes both coal production and power generation. Although a decline in coal prices reduces power generation costs, coal business revenues also decrease with the drop in coal prices, affecting overall profitability, so their share prices are under pressure—such as the share prices of Shaanxi Energy and Xinji Energy falling [0].

The impact of coal price fluctuations on power stocks mainly depends on the company’s business structure. The performance of pure thermal power companies is highly sensitive to coal prices; when coal prices decline, cost-side improvements are obvious, and performance elasticity is large. However, the performance of coal-electricity integrated companies is more complexly affected by coal prices: the revenues from coal business and power generation business will hedge each other to a certain extent, and the overall performance elasticity is relatively small. This difference in business structure has led to the differentiation of investment value among different types of power stocks under the expectation of declining coal prices [0].

For pure thermal power companies, the cost advantage brought by declining coal prices is their short-term investment opportunity, but attention needs to be paid to the possible fluctuation risks of subsequent coal prices and the impact of changes in power market supply and demand on electricity prices. For coal-electricity integrated companies, although coal business revenues decline in the short term, the cost stability of coal-electricity integration still has advantages in the long run. It is necessary to pay attention to the synergy between the company’s coal business and power generation business, as well as the uncertainty of future coal price trends [0].

The expectation of declining coal prices has led to a differentiation in the investment value of power stocks. Pure thermal power companies (without coal mine assets) have seen their share prices rise due to expected cost reductions, while coal-electricity integrated companies have seen their share prices fall due to declining coal business revenues. Investors should pay attention to the business structure of different power companies and conduct analysis combining coal price trends and power market supply and demand conditions.