Talk every Monday:
In CITIC basic chemical sector this week, the sub sector of civil explosives increased by as much as 15%, of which Hunan Nanling Industry Explosive Material Co.Ltd(002096) increased by as much as 28%, Tibet Gaozheng Explosive Co.Ltd(002827) increased by 27% and Shanxi Huhua Group Co.Ltd(003002) increased by as much as 20%. We believe that, on the one hand, thanks to the favorable policies, in December 2021, the “14th five year plan” for the safety development of civil explosives Industry issued by the Ministry of industry and information technology proposed to encourage the improvement of industrial concentration through merger and reorganization by 2025, and the industrial integration is expected to accelerate. On the other hand, driven by the improvement of China’s energy demand and infrastructure investment demand, the supply and demand pattern of civil explosives industry is improving, and the leaders of relevant industries are expected to continue to benefit.
From the perspective of policy, in December 2021, the Ministry of industry and information technology issued the safety development plan of civil explosives industry in the 14th five year plan. The above industrial policies are conducive to accelerating the marketization process of civil explosives industry and accelerating the integration of civil explosives industry. In addition, it is required to comprehensively promote industrial digital electronic detonators. Considering that the proportion of electronic detonators in the output of industrial detonators in 2021 is only 18%. Assuming that all electronic detonators will be completed in the future, the market space of electronic detonators is estimated to be more than 15 billion yuan, while the current market scale is less than 3 billion, with huge growth space.
The supply and demand pattern has been improving for a long time. From the perspective of the supply of civil explosive products, with the state’s attention to environmental protection and safe production, enterprises with high pollution, high energy consumption and backward production technology will be phased out. During the 13th Five Year Plan period, the supply growth of industrial explosives and detonators slowed down significantly. From 2016 to 2020, the cumulative production of industrial explosives was 20648800 tons, an increase of only 0.21% compared with the 12th Five Year Plan period, and the supply situation continued to improve. From the perspective of demand, about 70% of the products of civil explosive industry are used for the mining of coal, metal and non-metal mines. The change of mining volume of these three mines directly affects the sales of civil explosive products. We believe that China’s energy demand and infrastructure investment demand are still large, and the civil explosive industry is expected to still have good market demand support.
Investment strategy: in 2022, the civil explosives industry is expected to continue its boom. On the one hand, thanks to the favorable policies at the end of the year, enterprises with advantages in large scale, advanced technology, perfect product structure and cost control will increase their market share in the future, and the industrial concentration will be further improved. On the other hand, driven by the improvement of China’s energy demand and infrastructure investment demand, the supply and demand pattern of civil explosives industry is improving, and the leaders of relevant industries are expected to continue to benefit. It is suggested to pay attention to Hunan Nanling Industry Explosive Material Co.Ltd(002096) , Shanxi Huhua Group Co.Ltd(003002) and other relevant industry leaders with scale advantages and technical barriers.
Market review:
Sector performance: this week, CITIC’s basic chemical sector rose 2%, and the composition of the Shanghai Composite Index rose 2.2%. Compared with the Shanghai Composite Index in the same period, the basic chemical sector fell 0.2 percentage points behind. In terms of sub sectors, the sub sectors of basic chemical industry mainly rose this week, among which the sub sectors of civil explosive products, soda ash, phosphate fertilizer and phosphorus chemical industry, compound fertilizer and spandex led the rise; Carbon fiber, lithium chemicals, membrane materials, electronic chemicals, modified plastics and other sub sectors led the decline
Rise and fall of individual stocks: the basic chemical sector led the rise this week, including Poly Union Chemical Holding Group Co.Ltd(002037) , Fanli Digital Technology Co.Ltd(600228) , Hunan Nanling Industry Explosive Material Co.Ltd(002096) , Tibet Gaozheng Explosive Co.Ltd(002827) , St orange star, etc; The leading stocks include Aba Chemicals Corporation(300261) , Anhui Estone Materials Technology Co.Ltd(688733) , Great Chinasoft Technology Co.Ltd(002453) , Guangdong Fangyuan Environment Co.Ltd(688148) , Shenzhen Senior Technology Material Co.Ltd(300568) .
Risk tips: the risk of fluctuations in international oil prices, the risk of repeated global epidemics, etc.
