2021 is a year of major changes in the chemical industry. The establishment of the dual carbon target will have a very far-reaching impact on the chemical industry from both supply and demand, and bring very rich investment opportunities.
Core view
From the perspective of cycle, we are optimistic about agrochemical industry: with the global economic recovery in 2021, all industries of clothing, food, housing and transportation have increased significantly. As of September 21, the year-on-year growth rate of textile and clothing industry has rebounded by about 20%, and the sales of automobiles has also increased by about 10%. The completed area of real estate in China has greatly increased and the overseas liquidity is loose, and the year-on-year growth rate is also about 20%. However, looking forward to 22 years, the year-on-year growth rate in the field of textile, clothing and automobile will slow down, while the new construction of real estate in China and the contraction of land supply in the United States will open taper, and the demand for chemical industry is expected to be weaker than that in 21 years.
From the perspective of cycle, we are relatively optimistic about the pesticide sector in agrochemical industry. In the past 21 years, the global planting area has continued to rise, China’s export of agrochemical products is significantly higher than the historical level, and the cost of pesticide enterprises has also increased significantly, resulting in increasing income without increasing profits. In the past 22 years, we expect that the demand for pesticides will continue to improve, the pressure on the cost side is expected to ease, and the enterprise profit will increase significantly.
Sustainable development brings new opportunities: after China promised to reach the goal of carbon peak and carbon neutralization, the chemical industry has entered a new period of sustainable development, giving birth to a number of high growth tracks with high certainty. We are mainly optimistic about two directions: first, new energy materials, degradable materials, recyclable materials and bio based materials serving sustainable development on the demand side. Chemical enterprises have strong competitive advantages from the upstream of the industrial chain; Second, after carbon emission and energy consumption at the supply end become the core constraints, the advantages of light hydrocarbon chemical industry are prominent, and the value of by-product hydrogen has huge room for revaluation.
Leading companies are expected to return to value: under the dual carbon goal, the logic of continuous large-scale reinvestment in upstream industries and maintaining high roe to achieve leapfrog growth is unsustainable, resulting in the continuous decline of the company’s valuation level. However, we believe that the core of the excellence of leading companies is the continuous improvement of their own capabilities. Policies only restrict the short-term expansion of the industry and will continue to promote the differentiation of the industry in the long term. In particular, the leading companies in the past 21 years have also become the biggest beneficiaries with their market share of continuous expansion in the early stage. We believe that the growth of leading enterprises has not been weakened, but has been enhanced. During this period, the enterprise strength (profit and investment) and valuation level are backward, which has created good layout opportunities for investors.
Investment proposal and investment object
We suggest paying attention to Wanhua Chemical Group Co.Ltd(600309) (600309, buy), satellite Chemistry (002648, buy) and Jinneng Science&Technology Co.Ltd(603113) (603113, buy) under the value revaluation logic of light hydrocarbon chemical industry; Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) (600426, buy), Yibin Tianyuan Group Co.Ltd(002386) (002386, buy), Beijing Sanlian Hope Shin-Gosentechnical Service Co.Ltd(300384) (300384, buy), Zhejiang Huangma Technology Co.Ltd(603181) (603181, buy), Anhui Jinhe Industrial Co.Ltd(002597) (002597, buy) under the logic of service sustainable development; Jiangsu Yangnong Chemical Co.Ltd(600486) (600486, overweight), Hailir Pesticides And Chemicals Group Co.Ltd(603639) (603639, buy), Shandong Weifang Rainbow Chemical Co.Ltd(301035) (301035, not rated) under the promotion logic of agrochemical prosperity; And Rongsheng Petro Chemical Co.Ltd(002493) (002493, buy), Hengli Petrochemical Co.Ltd(600346) (600346, buy), Zhejiang Nhu Company Ltd(002001) (002001, overweight), Ningxia Baofeng Energy Group Co.Ltd(600989) (600989, buy), Tongkun Group Co.Ltd(601233) (601233, buy) under the regression logic of leading value.
Risk statement
Oil price fluctuation risk; The change of epidemic situation is less than the expected risk; Political risk; Changes in assumptions affect the calculation results.
（ Orient Securities Company Limited(600958) ）
