The Zhitong Finance App learned that on January 4, Hong Kong hydrogen concept stocks bucked the trend. As of press release, Dongyue Group (00189) and Jinyuan Hydrogenation (02502) have both risen by more than 2%. According to the news, on January 3, the Ningdong Energy and Chemical Base Management Committee issued the “2024 Revised Edition on Certain Measures to Promote the High-Quality Development of the Hydrogen Energy Industry at the Ningdong Base (Consultation Draft)”. The core of the measures is to strengthen top-level design for hydrogen energy development in the Ningdong region and enhance industry support.

According to the above opinion, the hydrogen production end needs to start construction and put into operation earlier than the supporting new energy side; invest more than 1-2 million/20 million in additional green hydrogen production equipment, and provide a one-time subsidy of 6%/7% of the equipment investment; and encourage and support chemical companies to gradually replace coal hydrogen production and methanol hydrogen production. For chemical projects to replace green hydrogen at the Ningdong base, it has been determined that this level of finance grants hydrogen use subsidies according to the 5.6 yuan/kg standard. A single enterprise does not exceed 5 million yuan per year, with a maximum subsidy of 3 years.

Hydrogen fueling station operators that meet the requirements for fuel cell vehicle demonstration applications in urban agglomeration, have completed the completion inspection before the end of 2025, have obtained an operating license required by the autonomous region, and have a daily hydrogenation capacity of 500 kg or more will be given construction subsidies according to the standard of no more than 20% of the total investment in the purchase and installation of approved equipment, up to a maximum of 3 million yuan. The subsidy funds are disbursed over 3 years.

Guolian Securities believes that the current regional hydrogen energy policy subsidizes all aspects of hydrogen energy, such as hydrogen production equipment, hydrogen-using chemical plants, hydrogen fueling stations, and hydrogen energy vehicles. On the one hand, the subsidies are strong and wide-ranging; on the other hand, the policy has an exemplary effect. It is expected that key hydrogen energy bases will announce subsidy policies one after another to promote industrial development.

In recent years, China's policy and standard system surrounding the hydrogen energy industry has continued to be strengthened, and hydrogen energy management standards have been introduced one after another. According to reports, 26 provinces, regions, and municipalities have publicly issued 316 special policies for the hydrogen energy and fuel cell industry, and policies clearly granting financial subsidies account for more than 40% of the new policies. The hydrogen energy project approval process system is gradually being clarified. In addition, 38 local governments have issued regulatory documents for the construction of hydrogen fueling stations, such as the liberalization of control of non-chemical park hydrogenation projects in various provinces and cities such as Shandong, Jilin, Guangdong, and Shanghai.

China's hydrogen energy industry is showing a strong momentum of development. Central enterprises such as China Power Investment Corporation, National Energy Group, CNPC, Sinopec, and CNOOC are directly involved in R&D and production of hydrogen production, hydrogenation, and equipment manufacturing. Among them, Sinopec aims to build China's largest hydrogen energy company with leading technology and first-class management, focusing on the two major fields of hydrogen energy transportation and green hydrogen refining and chemical, and vigorously developing integrated hydrogen energy businesses. Sinopec said that in addition to speeding up the layout of hydrogen fueling stations, it is also continuing to increase investment in the hydrogen energy industry chain. Up to now, 11 hydrogen fuel cell hydrogen supply centers have been built across the country.

On November 30 of last year, Ding Yeliang, deputy general manager of CGN New Energy, revealed that the CGN Ningxia Ningdong hydrogen production project has successfully started. The project is the first hydrogen energy commercialization project of the CGN Group. It aims to provide engineering evidence for subsequent large-scale hydrogen energy projects (covering the entire “photovoltaic—hydrogen generation-hydrogen storage-hydrogen transport-hydrogenation” industry chain. The new energy construction scale is 17,600 kilowatts, with 2,400 standard square meters/hour hydrogen production stations). The project is expected to be fully put into operation in mid-2024.

China Securities's research report on December 29 last year pointed out that fuel cell vehicle industry chain subsidies are expected to be implemented in 2024, and FCEV production and sales will increase or accelerate again due to the accumulation of cost reduction effects in the industrial chain; new application scenarios and business models for green hydrogen and its derivatives are expected to take shape, which is expected to drive investment in green hydrogen projects and demand for electrolyzers to grow rapidly. Therefore, this year may be the year the industry expects to recover, and the development of the FCEV and green hydrogen industry chains is expected to accelerate.

Guojin Securities's research report on December 27 last year pointed out that with sufficient reserves for green hydrogen projects, project implementation will continue to grow at a high rate in the next 1-3 years, and the hydrogen energy sector market will continue to be driven from the top down in 2024.

1) Green hydrogen production is driven by the continuous implementation of projects. The overall performance of the sector will depend on the continuity and absolute volume of tenders. As the bidding requirements for electrolyzer projects have gradually increased over the past year, the first choice is to enter large-scale project suppliers and overseas shipping companies, focusing on equipment-side opportunities related to electrolyzers.

2) Under the major development of the industry, the middle and lower reaches are being promoted simultaneously, and they are optimistic about the equipment opportunities brought by the construction of hydrogen fueling stations and the core components of fuel cells.

Related concept stocks:

Dongyue Group (00189): Mr. Wang Zhenhua, Deputy General Manager of Dongyue Group, said earlier that the company has now achieved autonomous control of more than a dozen products in the entire industry chain, from the most basic software to proton exchange membranes (used in PEM electrolyzers and fuel cells). At the same time, it has formed a 500,000 square meter production base and is a strong competitor among domestic manufacturers.

Jinyuan Hydrogenation (02502): In June 2023, Jinyuan Hydrogen Energy signed a cooperation agreement with the committee designated by the government to coordinate matters relating to the Zhengzhou High-tech Industrial Development Zone. The agreement states that Jinma Energy must establish a project company in the Zhengzhou High-tech Zone. The project company plans to build 15 gas stations equipped with hydrogenation facilities in the Zhengzhou High-tech Industrial Development Zone within the next three to five years.

CGN New Energy (01811): CGN has deployed hydrogen energy multi-scenario application projects in several provinces. Among them, the Ningxia Lingwu 1 million kilowatt photovoltaic off-grid hydrogen production project (included in the third batch of major bases in the country) and the Hami 1 million kilowatt photovoltaic hydrogen production project (600,000 kilowatts in the first phase) have obtained construction targets. The planned 3 million kilowatt wind hydrogen to methanol project is expected to be completed in 2024.

China Xuyang Group (01907): In the road show in December last year, China's Xuyang Group mentioned that in terms of hydrogen energy, the company will promote the construction of a hydrogen energy transportation pipeline between Dingzhou, Gaobeidian, and Beijing, reduce hydrogen energy transportation costs, and establish a joint venture to expand the hydrogen energy transportation fleet. In addition, the company will continue to promote the construction of liquid hydrogen, natural gas hydrogen mixing, and hydrogen energy demonstration projects.