Key investment points
Performance of the sector this week: this week (February 7-february 12, the same below), the market composite index fell broadly. The Shanghai Composite Index closed at 3462.95, up 3.02% this week, the Shenzhen Component Index fell 0.78% this week, and the chemical sector (Shenwan) rose 3.94%. Performance of individual chemical stocks this week: the chemical sector rose with the market this week, and the top gainers were Poly Union Chemical Holding Group Co.Ltd(002037) , Hunan Nanling Industry Explosive Material Co.Ltd(002096) , Tibet Gaozheng Explosive Co.Ltd(002827) , Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) , Elion Clean Energy Company Limited(600277) , Cangzhou Dahua Co.Ltd(600230) , Shanxi Huhua Group Co.Ltd(003002) , Zhengwei new materials, Luxi Chemical Group Co.Ltd(000830) , Ningbo Runhe High-Tech Materials Co.Ltd(300727) . In December 2021, the Ministry of industry and information technology issued the safety development plan for the civil explosives industry in the 14th five year plan. The civil explosives sector continued to rise. This week, Poly Union Chemical Holding Group Co.Ltd(002037) , Hunan Nanling Industry Explosive Material Co.Ltd(002096) and Tibet Gaozheng Explosive Co.Ltd(002827) increased by 61.04%, 28.68% and 27.75% respectively, of which Poly Union Chemical Holding Group Co.Ltd(002037) led the chemical sector. The company has a production capacity of 47 million electronic detonators / year. On February 9, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) announced that Jiangyin court ruled to accept the reorganization application of Chengxing group proposed by Jiangyin regional headquarters economic park. This week, Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) increased by 27.72%.
Crude oil market dynamics this week: the decline of EIA inventory and supply concerns caused by severe cold weather boosted crude oil prices. Ice oil distribution closed at US $94.44/barrel (mom + 1.25%); WTI crude oil closed at US $93.10/barrel (mom + 0.86%). The price of butyl acrylate (+ 16.00%) and butyl acrylate (+ 17.00%) were the most important chemicals in the week, and the price of butyl acrylate (+ 16.00%) was the most important one in the week. This week, the price of melamine raw material urea rose, the overall operating rate of the industry was low, the market supply was less than demand, and the price rise was strong. The inventory of n-butanol enterprises was low in the early stage of this week, and the price rose rapidly, but the price decreased in the second half of the week. This week, the international oil price was at a high level, the demand in the downstream market recovered after the festival, and the ethylene price rose at a high level due to insufficient supply.
Chlorfenoxamide has a broad market space, and Chinese enterprises have planned production capacity one after another: chlorfenoxamide is a star pesticide product of fumeishi company, which has the advantages of good persistence, good activity, low toxicity, environmental and biological safety, and its compound patent protection will be terminated in China in August 2022. Chinese enterprises have arranged production capacity one after another, and the production capacity of 57000 tons of technical drugs and 15000 tons of intermediates is waiting to be released.
Main lines of Chemical Investment: (1) cyclical growth stocks are expected to improve marginally: since the turning point of Q2 chemical boom in 2020, the prices of some chemicals have risen to historic highs. As the mismatch between supply and demand moves towards balance and superimposes the downward pressure of the economy, the traditional chemical cyclical stocks have made a sharp correction. We believe that we should focus on the industry leaders with continuous production expansion capacity in the 14th five year plan, supplement the price with quantity, especially the high-quality companies that embrace change and look for the second growth curve, which are expected to cross the cycle in the medium and long term. Key recommendations: Wanhua Chemical Group Co.Ltd(600309) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , satellite chemistry, China National Chemical Engineering Co.Ltd(601117) , Ningxia Baofeng Energy Group Co.Ltd(600989) , lithium iron phosphate industrial chain and soda ash industrial chain. (2) Focus on high-end manufacturing and supporting materials for high-tech industries, including biosynthesis, electronic materials, degradability, tail gas treatment, carbon fiber, etc. Key recommendations: Haohua Chemical Science & Technology Corp.Ltd(600378) , Valiant Co.Ltd(002643) . (3) For the pesticide industry chain entering the business cycle, the key recommendations are: Jiangsu Yangnong Chemical Co.Ltd(600486) , Anhui Guangxin Agrochemical Co.Ltd(603599) .
Risk warning: crude oil supply fluctuates sharply; The situation of trade war worsened; The risk of large exchange rate fluctuations.
