Key investment points
Last week, the average price of liquid air separation gas fell 33% year-on-year; Rare gas prices continued to rise
1) affected by the Spring Festival, the market demand for liquid air separation gas is weak. In January 2022, the comprehensive liquid gas price was 751 yuan / ton, down 2% year-on-year and 38% month on month. Since 2018, the unit price of liquid oxygen has dropped by 381% year-on-year; The unit price of liquid nitrogen is 502 yuan / ton, down 3% year-on-year, at a low level in recent years; The unit price of liquid argon was 776 yuan / ton, a year-on-year decrease of 53%.
2) the price of carbon dioxide has shown a downward trend since the second half of 2021. On February 5, the average price of carbon dioxide in the past seven days was 346 yuan / ton, down 3% month on month and 6% year-on-year.
3) the price of rare gas continues to rise. On January 24, 2022, the ex factory price of krypton gas was 28500 yuan / m3 and that of xenon was 292000 yuan / m3.
Industry dynamics
1) industrial gas leader, hydrogen energy, carbon capture and other emerging tracks. Air Liquide and Faurecia jointly develop and produce on-board liquid hydrogen storage systems for the automotive industry, invest US $4.5 billion in air products, build a blue hydrogen plant, and jointly develop the world’s largest cross-border “carbon capture” industrial chain with BASF.
2) the number of small-scale on-site contracts of Linde gas reached a new high in 2021. In 2021, Linde gas signed 43 new project agreements, with a year-on-year increase of 19%. Downstream industries include energy, electronics, mining and manufacturing.
Continue to be optimistic about investment opportunities in the industrial gas industry, and the market value of overseas comparable companies is nearly trillion yuan
1) in 2020, the global industrial gas market will reach 135 billion US dollars, with an increase of 8% (gas online). China’s industrial gas market will be nearly 200 billion yuan in 2021, and the CAGR will be about 8% from 2019 to 2021, which is expected to produce a large market capitalization company.
2) the corresponding market value of Linde, Air Liquide and air chemical products of overseas comparable companies is about 100 billion yuan, 500 billion yuan and 400 billion yuan respectively, corresponding to an average PE of about 30 times in 2021.
3) the concentration of China’s air separation gas market is relatively low, Cr4 is about 50%, while overseas is 70%. At the same time, the Chinese share of multinational companies is about 40-50%, and the market share of new projects signed by local enterprises has increased significantly in recent years.
4) the share of independent brands in the special gas market is only 10%, and the domestic substitution trend is obvious and has great potential. We are optimistic about rare gas products as the golden track of electronic special gas, and the price increase logic is expected to continue in the next 3-5 years.
Investment suggestions:
Focus on industrial gas industry leader Hangzhou Oxygen Plant Group Co.Ltd(002430) , carbon dioxide leader / electronic special gas Nova Hunan Kaimeite Gases Co.Ltd(002549) , and focus on electronic special gas companies such as Guangdong Huate Gas Co.Ltd(688268) , Jiangsu Yoke Technology Co.Ltd(002409) , Haohua Chemical Science & Technology Corp.Ltd(600378) , Suzhou Jinhong Gas Co.Ltd(688106) .
Hangzhou Oxygen Plant Group Co.Ltd(002430) : optimistic about the continuous improvement of the market share of industrial gas business, and expand gas and refine equipment! Promote the 2021 equity incentive plan, promote the issuance of convertible bonds in an orderly manner, and upgrade to the leader of industrial gas.
1) the growth rate and sustainability of gas business are expected to exceed market expectations. In 2021, the scale of newly signed gas reached 610000 m3, with a year-on-year growth rate of 118%. We expect that the production and sales volume of the company’s on-site gas production business is expected to reach 3 million m3 in 2025, the revenue will reach 15 billion yuan, and the compound growth rate of revenue will reach 30%.
2) the market expectation of equipment business is too pessimistic, and the periodicity is expected to be greatly weakened. The company’s equipment in hand, full orders, carbon neutralization and other policies will affect the production rhythm of downstream industries, but the long-term demand is still increasing.
Hunan Kaimeite Gases Co.Ltd(002549) : China’s food grade carbon dioxide leader and electronic specialty gas will become a new growth pole
China’s electronic special gas market is 15 billion yuan, with a compound growth rate of about 20%, which is mainly used in integrated circuits (accounting for 70%) and other fields. The localization rate of China’s electronic specialty gas is about 15%, and there is a wide space for domestic substitution. The company started with the rare gas gold track, and the electronic special gas phase II (syngas) project has been settled in Chenzhou, Hunan.
Risk tips
1) the demand of downstream industries is lower than expected; 2) Risk of large fluctuation of retail gas price
