GF SECURITIES·2026-03-08 13:28Investment Rating - The report maintains a "Buy" rating for key companies in the green hydrogen and green ammonia sector, specifically China Energy Engineering Corporation (601868.SH) and Huadian Heavy Industries (601226.SH) [4]. Core Insights - The green hydrogen industry is driven by three main factors: energy security, policy planning, and economic viability [11]. - Green hydrogen is produced through renewable energy-powered electrolysis, achieving near-zero carbon emissions during production [11]. - The report predicts significant market potential, estimating that by 2030, China's hydrogen demand could reach 38.1 million tons, with green hydrogen sales market space projected to be between 57.2 billion to 114.3 billion CNY [11][29]. Summary by Sections 1. Industry Drivers - Driver 1: Energy Security Rising oil and gas prices emphasize the urgent need for energy security, with China's oil self-sufficiency rate projected at 56%-61% and natural gas at 23%-26% from 2020 to 2024. The geopolitical situation in the Middle East has further exacerbated supply risks, leading to a 40% increase in WTI crude oil prices and a 119% increase in LNG prices from early 2026 to March 6, 2026 [20][21]. - Driver 2: Policy Support The government is intensifying support for hydrogen projects, with the first batch of pilot projects announced, covering various hydrogen production and storage methods. Subsidies are being provided for both investment and operational phases, with specific examples including a maximum subsidy of 13 CNY per kilogram for projects producing over 100 tons of green hydrogen annually in Yunnan Province [27][28]. - Driver 3: Cost Reduction The costs of green hydrogen production are decreasing due to lower electricity prices and equipment costs. The price of alkaline electrolyzers is expected to drop from approximately 7 million CNY per set in 2023 to a range of 4.6 to 5.88 million CNY by 2025, a reduction of about 30% [43][41]. 2. Market Potential - The report estimates that the average annual market space for electrolyzers in China from 2026 to 2030 will be between 14.3 billion to 29.3 billion CNY, with green hydrogen's penetration rate in the hydrogen demand projected at 15%-30% [29][11]. 3. Company Analysis - China Energy Engineering Corporation Currently has an operational capacity of 200,000 tons and plans for nearly 900,000 tons per year in green ammonia production [4]. - Huadian Heavy Industries Backed by China Huadian, the company is involved in the entire hydrogen energy value chain, producing both alkaline and PEM electrolyzers [4]. 4. Financial Metrics - China Energy Engineering Corporation Current stock price: 2.89 CNY, with a target price of 3.38 CNY, indicating a potential upside [4]. - Huadian Heavy Industries Current stock price: 11.44 CNY, with a target price of 9.32 CNY, also suggesting a favorable investment opportunity [4].