This week’s Chemical Market Overview
Shenwan chemical rose 0.42% this week, underperforming the CSI 300 index by 2.7%. In the market, the targets whose fundamentals ushered in the marginal inflection point performed well, and some of the targets with strong early performance were under pressure. Recently, the market generally feedback that it is difficult to vote. Our understanding may be related to the full excavation of mainstream tracks. Next year, the market may reduce the expected rate of return, and the probability of diversion of funds to non mainstream tracks is increasing; In addition, in the context of the scarcity of flexible tickets, the attention of the subject of 30% – 50% yield is expected to increase. In terms of direction, we suggest focusing on the following directions:
First, in the direction of optical film, the industry has a technical foundation and continues to expand domestic alternatives;
Second, in the direction of high-end engineering plastics, start localization and substitution;
Third, agrochemical targets have anti cycle properties.
Portfolio recommendation
Jiangsu Flag Chemical Industry Co.Ltd(300575) 、 Shenzhen Wote Advanced Materials Co.Ltd(002886) 、 Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) 、 Sichuan Em Technology Co.Ltd(601208) 、 Wanhua Chemical Group Co.Ltd(600309)
Big events of the week
The central economic conference was held, which once again emphasized the issues related to carbon neutralization and guided the pace of promotion. The meeting proposed: ① to enhance China’s resource production guarantee capacity and speed up the construction of waste recycling system; ② Once again, it is emphasized that we should adhere to promoting double carbon, but it is impossible to accomplish its work in one battle. The gradual withdrawal of traditional energy should be based on the safe and reliable substitution of new energy. The new renewable energy and raw material energy consumption should not be included in the total energy consumption control, and conditions should be created to realize the transformation from “double control” of energy consumption to “double control” of total carbon emission and intensity as soon as possible; ③ Based on the basic national conditions of coal, we should pay attention to the clean and efficient utilization of coal, increase the consumption capacity of new energy, and promote the optimal combination of coal and new energy. To ensure energy supply, large enterprises, especially state-owned enterprises, should take the lead in ensuring supply and stable prices.
It can be seen that the direction of carbon neutralization will still be one of the main lines of development next year. However, for the relevant problems in the implementation process this year, the meeting gave relatively clear policy guidance, did not engage in “one size fits all”, guaranteed the supply and production of energy end and primary products, and maintained relatively stable prices; In view of the fact that renewable energy and raw materials are not included in the total energy control in the early stage, it provides further development opportunities for upstream high energy consuming material manufacturers such as photovoltaic, but also suppresses the impact of the sharp rise of prices on downstream demand to a certain extent. On the whole, the meeting made the implementation of the double carbon policy more reasonable. The over implemented energy consumption control in the early stage affected the normal production and operation of normal enterprises, increased the production cost of products, and significantly raised the production price of traditional chemicals. At the same time, the meeting pointed out that it is still based on the basic national conditions of coal, improving the clean and efficient utilization of coal, and giving room for development for the coal chemical industry chain. At the same time, the energy supply and price stability of large enterprises is expected to reduce the cost pressure of coal chemical enterprises, and excellent leading enterprises still have room for sustainable development.
Investment advice
In terms of investment direction, we believe that more opportunities will come from small and medium-sized stocks next year, especially those with strong performance certainty and certain safety cushion. Specifically, first, new energy and chemical materials, we are optimistic about ternary cathode and EVA; Second, it is suggested to focus on the tire and resin industry; Third, the direction of new materials, especially the direction of ushering in the inflection point. It is suggested to focus on optical films, molecular sieves and high-end engineering plastics.
Risk statement
The epidemic affects the demand outside China, the crude oil price fluctuates violently, and the change of trade policy affects the industrial layout.
