Maintain the rating that the industry is stronger than the market. In 2021, the price of chemical products generally rose, and more than 70% of the 269 enterprises that issued performance forecasts were happy with their performance. Among them, 133 enterprises whose net profit attributable to the parent company had at least doubled, accounting for 49.4%.
Industry trends:
Oil prices have returned to a high point. In 2021, the annual average price of WTI crude oil was about US $67.9/barrel, with a year-on-year increase of 71.5%; The average annual price of Brent crude oil was about US $70.8/barrel, up 63.4% year-on-year. In 2021, the impact of the epidemic on the crude oil market is still, but the implementation of global monetary easing policy and the recovery of demand promote the recovery of oil prices. As of February 11, 2022, WTI crude oil closed at US $89.88/barrel, up 19.5% from the beginning of the year. In the future, uncertainties such as US interest rate hikes and geopolitics may dominate the trend of crude oil, and crude oil is expected to remain high and volatile in the first half of 2022.
Downstream demand recovered steadily, and the price of chemicals rose generally. Affected by the base number, the overall sales volume of some downstream chemical industries in 2021 was first high and then low year-on-year in the same month. Since 2021, except for real estate, the downstream demand has basically returned to the pre epidemic level. Among the 90 chemical products we focus on monitoring, except acetone, the prices have increased. Among them, the increase rate of more than 100% accounts for about 16%, the increase rate of 50-100% accounts for about 27%, and the increase rate of 0-50% accounts for about 57%. Since the fourth quarter of 2021, the prices of more than half of chemicals have shown a downward trend, and some petrochemical products still rise slightly supported by crude oil prices.
More than 70% of the performance of chemical enterprises is expected. As of February 11, 2022, a total of 269 companies in the chemical industry have issued performance forecasts for the 2021 annual report, accounting for 61.7% of the total number of Shenwan chemical (excluding B shares). Among them, the performance of 204 companies is expected to be positive (including year-on-year growth and turning losses into profits), accounting for about 76%. 133 companies, accounting for 49.4%, achieved at least a doubling of the net profit attributable to the parent company in the performance forecast, which was mostly related to the rise in the price of chemicals and the corresponding increase in the price of main products during the year. From the perspective of molecular industries, the number of enterprises with pre increased performance in other chemical products, chlor alkali, other plastic products, other chemical raw materials, pesticides and other sub industries ranks first. Among them, other chemical sub industries include a number of upstream material companies in the new energy vehicle industry chain. The performance of other chemical products, modified plastics, coatings, paints and inks, pesticides, tires and other sub industries is expected to decline, and the number of enterprises ranks first. In other chemical industry, pesticide and other sub industries, the differentiation of enterprise performance is more obvious.
Investment suggestions:
Maintain the rating that the industry is stronger than the market. In 2021, the price of chemical products rose, the production and sales of chemical enterprises were booming, and the annual report performance of more than 70% of chemical enterprises was expected to be good. We believe that the prices of some chemical products may fall in 2022 (especially in the second half of the year), but the recovery trend of the chemical industry will continue. Industrial upgrading and concentration improvement under the background of carbon neutralization will be the main tone of industrial development in the next few years. We maintain the rating that the industry is stronger than the market, especially optimistic about the long-term development of excellent leading enterprises.
Oil price supports private refining, and industry leaders are expected to cross the cycle. Since the fourth quarter of 2021, after full adjustment, the valuation of private refining, industry leaders and other related chemical enterprises has returned to a low level again, and the rise of crude oil price is expected to boost the performance of private refining stocks. At the same time, as the profitability continues to exceed expectations, the high-quality chemical leader is expected to usher in value revaluation. Recommendations: Wanhua Chemical Group Co.Ltd(600309) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , Zhejiang Nhu Company Ltd(002001) , Jiangsu Eastern Shenghong Co.Ltd(000301) , Rongsheng Petro Chemical Co.Ltd(002493) , satellite chemistry, Tongkun Group Co.Ltd(601233) , etc.
New materials are expected to continue the high boom. Since the fourth quarter of 2021, the stock price of some new material enterprises has been significantly corrected, but the situation of short supply of semiconductors and new energy materials under the background of domestic substitution has not changed, and the performance of some new material enterprises in 2021 and beyond may exceed expectations. With the gradual launch of new production capacity in 2022, it is expected that the production and sales of semiconductor and new energy materials enterprises will continue to be strong, and the valuation is expected to be repaired. Recommendations: Crystal Clear Electronic Material Co.Ltd(300655) , Jiangsu Yoke Technology Co.Ltd(002409) , Valiant Co.Ltd(002643) , Sunresin New Materials Co.Ltd Xi’An(300487) , Shandong Sinocera Functional Material Co.Ltd(300285) , Zhejiang Wansheng Co.Ltd(603010) , Anji Microelectronics Technology (Shanghai) Co.Ltd(688019) , National Silicon Industry Group Co.Ltd(688126) etc.
In addition, under the “steady growth”, infrastructure is expected to continue to develop, and some building structural material enterprises will benefit. Recommendations: Sobute New Materials Co.Ltd(603916) , Zhejiang Huangma Technology Co.Ltd(603181) , Weihai Guangwei Composites Co.Ltd(300699) etc. Some pesticide products are expected to maintain a high boom: recommendations: Lier Chemical Co.Ltd(002258) , Lianhe Chemical Technology Co.Ltd(002250) , etc.
Risk tips
Risk of abnormal decline of oil price; “Dual control of energy consumption” and risks brought by changes in environmental protection policies; The risk of weakening downstream demand caused by abnormal economic fluctuations; Omicron virus may cause the duration and impact of the epidemic to exceed expectations
