Event:
Government work report sets the tone for steady growth this year
On March 5, 2022, when the national “two sessions” kicked off, Premier Li Keqiang made a government work report, which proposed that this year’s work should adhere to the general development tone of “stability first and seek progress while stability”, and strive to achieve the expected goal of GDP growth of about 5.5%. Next, this paper comments on the relevant points of the government work report and gives relevant investment suggestions around the four themes of steady growth, national defense technology, energy security and carbon neutralization.
Brief comment
Adhering to the principle of “stability first and seeking progress while maintaining stability”, the report on the subject of materials related to traditional infrastructure real estate points out that in the face of new downward pressure, we should put steady growth in a more prominent position. This year, we will strive to stabilize the macro-economic market and keep the economy running within a reasonable range. All regions and departments should earnestly shoulder the responsibility of stabilizing the economy and actively launch policies conducive to economic stability. We are optimistic about Chengdu Guibao Science & Technology Co.Ltd(300019) , Zhuzhou Times New Material Technology Co.Ltd(600458) .
The growth rate of national defense funds returns to the “7% era” and is optimistic about new materials in the upstream of military industry
China’s defense expenditure in 2022 was 1450.4 billion yuan (about 228.8 billion US dollars), an increase of 7.1% year-on-year. China’s defense growth rate has continued to rebound since reaching the bottom in 2020 (+ 6.57%), and defense expenditure entered an upward trend in 2021 (+ 6.89%). According to the data of Stockholm Peace Research Institute, in 2020, the proportion of military expenditure in GDP of all countries in the world reached 2.4%, while that of China was only 1.7%, which has great room for improvement. The government work report pointed out that it is necessary to “comprehensively deepen military training and preparation, firmly and flexibly carry out military struggle, safeguard national sovereignty, security and development interests”, “strengthen national defense science and technology innovation” and “optimize the layout of national defense science, technology and industry”. With the increasingly complex international situation, China is expected to strengthen national defense construction and maintain a high growth rate in equipment and training costs. We are optimistic about Sinofibers Technology Co.Ltd(300777) , the subject of new materials in the upstream of military industry with core barriers.
Energy security has been raised to the same level as food security, which is conducive to the improvement of the status of the resource industry. The report points out that ensuring food and energy security. Ensure the important Shenzhen Agricultural Products Group Co.Ltd(000061) supply of grain and ensure the people’s livelihood and the normal production and operation of enterprises. At the same time, it is pointed out to promote the energy revolution, ensure energy supply, based on resource endowment, adhere to the first establishment and then destruction, overall planning, and promote the low-carbon transformation of energy. Strengthen the clean and efficient utilization of coal, orderly reduction and substitution, and promote the transformation of energy conservation and carbon reduction, flexibility and heating of coal and electricity. The statement emphasizes the irreplaceable position of the traditional energy industry in economic transformation. We are optimistic about the upstream oil and gas resource stock CNOOC (Hong Kong stock) and the private energy comprehensive platform Guanghui Energy Co.Ltd(600256) , which has both gas and oil and actively distributes clean coal refining. At the same time, we recommend Hubei Xingfa Chemicals Group Co.Ltd(600141) .
There will be no assessment target for energy intensity this year, and the government work report on “carbon peaking and carbon neutralization” will be promoted in an overall and orderly manner. It is specially pointed out in the government work report that the energy intensity target will be assessed in an overall manner within the 14th Five Year Plan Period, with appropriate flexibility, and the new renewable energy and raw material energy will not be included in the total energy consumption control. This statement is conducive to the development of biodiesel industry and the further improvement of market share and competitiveness of leading enterprises in coal chemical industry. We are optimistic about biodiesel enterprises Zhejiang Jiaao Enprotech Stock Co.Ltd(603822) , Longyan Zhuoyue New Energy Co.Ltd(688196) and leading enterprises in coal chemical industry Ningxia Baofeng Energy Group Co.Ltd(600989) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) .
Risk tip: the price of raw materials has risen sharply; Policy regulation exceeded expectations; Downstream demand was lower than expected.
