In the coming year, we are optimistic about the continuous growth of new material industry and the cycle subdivision industry leader maintaining the prosperity pattern
Viewpoint 1: the cycle peaked at a high level, and only some industry leaders whose prosperity pattern can be maintained are optimistic. Affected by the mismatch between global supply and demand caused by the epidemic and the compression of supply by China’s double carbon policy, the prosperity of the chemical industry has continued to rise since the middle of last year. We believe that the prosperity of the current cycle has peaked for two reasons: 1. The global supply side affected by the epidemic and the cold wave in the United States has gradually recovered; 2. China’s policies have been corrected. The once soaring prices of coal and other bulk commodities have fallen sharply this year, and the growth rate of investment in the industry will also improve significantly for the purpose of steady growth; It is expected that the decline of cost side and the increase of supply will return the profit of cyclical products to a reasonable level. It is difficult for most cycle sub industries to have excess returns in the next year. The target industries that can be concerned include Baima Wanhua Chemical Group Co.Ltd(600309) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , which has a stable industry structure or obvious cost advantage, subdivided industries with uncertain business structure in the next three years, such as calcium carbide BDO industry leader, and Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) which distributes potash resources and continues to increase production capacity in Southeast Asia.
Viewpoint 2: the new material industry benefits from the national policy of high-quality development and will usher in a period of rapid growth. The scale of China’s new chemical materials market is up to 1.3 trillion yuan, and it is expected to reach 2.2 trillion yuan in 2025. At present, many medium and high-end new materials in China still rely heavily on imports. The development of new materials industry can help the rapid development of science and technology industry by breaking through neck technology on the one hand, and revitalize industries with large market scale by breaking through key technologies on the other hand, Promote high-quality economic development. The Ministry of industry and information technology has clearly put forward in the 14th five year plan that it will strive to break through key technologies such as independent synthesis of adiponitrile and encourage the development of degradable polymers. In addition, the decline in the price of upstream raw materials next year is also conducive to the improvement of the profitability of the midstream new material industry.
We are optimistic about the following industries and targets: breaking through the neck material adiponitrile and building a platform leading supplier of high-end chemicals and advanced materials China National Chemical Engineering Co.Ltd(601117) ; After benefiting from the localization of adiponitrile, the supply increase and cost decrease drive the rapid growth of PA66 demand; Natural alkali industry benefiting from the great growth space brought by the optimization of soda ash industrial structure; EVA photovoltaic materials driven by the rapid growth of photovoltaic installation; Cut into lithium iron phosphate industry, mineralization integration advantages of Sichuan Development Lomon Co.Ltd(002312) , Saline Lake lithium lead Sunresin New Materials Co.Ltd Xi’An(300487) , benefit from wind power, hydrogen and other demand driven carbon fiber tap Jilin Chemical Fibre Co.Ltd(000420) , environmental protection zeolite material production capacity continues to grow, expand the new materials such as photoresist Valiant Co.Ltd(002643) , polymer materials anti-aging auxiliaries industry.
Investment suggestions: recommended China National Chemical Engineering Co.Ltd(601117) , Sichuan Development Lomon Co.Ltd(002312) , Sunresin New Materials Co.Ltd Xi’An(300487) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , Jilin Chemical Fibre Co.Ltd(000420) , Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) .
Risk factors: the risk of the continuous impact of the epidemic on the global economy.
