This week’s Chemical Market Overview
This week, the CSI 300 index fell 4.51% and the SW chemical index fell 3.26%. The three sub industries with the largest increase are fluorine chemical industry (Shenwan) (1.18%), petroleum processing (Shenwan) (0%) and petroleum trade (Shenwan) (0%); The three sub industries with the largest decline were polyester (Shenwan) (- 7.82%), viscose (Shenwan) (- 7.25%) and other plastic products (Shenwan) (- 5.71%).
Portfolio recommendation
\u3000\u3000 Jiangsu Flag Chemical Industry Co.Ltd(300575) 、 Luoyang Jalon Micro-Nano New Materials Co.Ltd(688357) 、 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) 、 Shenzhen Wote Advanced Materials Co.Ltd(002886) 、 Sichuan Em Technology Co.Ltd(601208)
Major events of this week
The meeting of the Political Bureau of the CPC Central Committee once again explored the carbon peak and reasonably implemented it to ensure the orderly development of the industry. The conference on carbon peak and carbon neutralization has corrected the intensity and rhythm of emission reduction, and regional differences should be considered while ensuring reasonable development. The new energy track is still the focus of future development, and the demand for materials driven by it still has a sustained growth momentum, while the stable supply of traditional energy will further ensure the stable development of relevant industrial chains. Renewable energy and raw material energy consumption are not included in the total energy consumption control. The new assessment system provides further space for the development of biosynthesis and some coal chemical projects.
Sumitomo chemical will build a new LCP production line and expand its capacity by 30%. On January 25, Sumitomo chemical said that it had decided to build a new production line for its super engineering plastic liquid crystal polymer (LCP) at its Ehime factory (xinjubang City, Ehime Prefecture, Japan). The expansion will increase the group’s production capacity by about 30%, and the new production line is planned to be completed in the summer of 2023. LCP has excellent heat resistance, fluidity and dimensional stability. It has been widely used in a wide range of applications, including electronic components of PCs and smart phones. In recent years, Chinese enterprises have made good progress in LCP, such as Shenzhen Wote Advanced Materials Co.Ltd(002886) , Kingfa Sci.& Tech.Co.Ltd(600143) and other enterprises, with rapid sales growth.
Investment advice
This week, the market was under further pressure, and the volume and energy decreased. Among them, Shenwan chemical fell 3.26%, outperforming the Shanghai and Shenzhen 300 index by 1.25%. On the subject, most of the subjects are under pressure, especially those with a downward margin of fundamentals or an excessive increase in the early stage. After the recent roadshow, the market is concerned about the follow-up of the sector. Our understanding is that although it is difficult to judge the short-term trend of the sector, we can better judge the bottom of market value or valuation of high-quality stocks from the medium-term dimension, especially in the market environment of negative feedback. In terms of investment, we suggest selecting individual stocks, especially the targets with gradually prominent cost performance, such as: Sichuan Em Technology Co.Ltd(601208) , Shenzhen Wote Advanced Materials Co.Ltd(002886) .
Risk tips
The epidemic affects the demand outside China, the crude oil price fluctuates violently, and the change of trade policy affects the industrial layout.
