Investment advice
Industry perspective: the central economic work conference in early December 2021 proposed that “new renewable energy and raw material energy consumption shall not be included in the total energy consumption control”, which has opened a huge space for the high growth of petrochemical leaders. Leading petrochemical enterprises continue to carry out large-scale layout in new energy and new materials, and promote the continuous improvement of the added value of leading products of large refining and chemical industry. At the same time, leading petrochemical enterprises, such as private large refining and chemical enterprises, after the refining and chemical projects are put into operation, The world’s largest clustered aromatic hydrocarbon production capacity and the world’s largest clustered olefin production capacity have the ability to extend downstream to more than 20 kinds of scarce new energy and semiconductor materials, which are extremely scarce all over the world. At the same time, compared with new energy or semiconductor material enterprises in a single link, the integrated large-scale advantages of large refining and chemical leaders will also have obvious cost advantages and comprehensive competitiveness once they overcome technology.
After the refining and chemical projects are put into operation, the private large-scale refining and chemical leading enterprises can form an operating net cash flow of about 50-70 billion a year. Without other forms of fund-raising, the large-scale refining and chemical leading enterprises have the maximum endogenous investment capacity of 170-220 billion / year. Considering the reduction of cash consumption caused by debt and cash dividends, it is calculated at a 50% discount, Large refinery also has the capacity to generate capex of 85-110 billion / year. Therefore, it is historically inevitable that all kinds of new energy and new materials directly downstream of large refinery will become the core investment direction of large refinery, which also coincides with the tone set by the central economic work conference.
Major countries around the world continue to promote the “double carbon” superposition epidemic, which has a significant negative impact on energy production and capital expenditure. It is difficult to fundamentally alleviate the supply problems of upstream main energy such as oil, coal and natural gas. However, many new energy materials and new material projects relying on oil, coal and natural gas as raw materials are in an environment of significant growth in long-term demand, The prosperity may be maintained for a long time. When the new capacity is gradually put into operation, the performance of leading petrochemical enterprises continues to grow significantly, with strong certainty, and the current sector valuation is at a low level, with huge space.
Industry rating and investment strategy: the demand growth of new energy related materials is highly deterministic, and the integrated industrial layout of major refining and chemical leading enterprises has significant advantages in scale, cost and industrial structure! We continue to maintain a “buy” rating for the petrochemical industry.
Related subjects: Rongsheng Petro Chemical Co.Ltd(002493) , Hengli Petrochemical Co.Ltd(600346) , Tongkun Group Co.Ltd(601233) , Hengyi Petrochemical Co.Ltd(000703) , Zhejiang Wansheng Co.Ltd(603010)
Risk tips (1) the production and production schedule of large refining and chemical units and new energy material units is less than expected, or accidents lead to long-term shutdown; (2) The development of new energy is less than expected or there is overcapacity in the new energy material industry, resulting in a sharp decline in prices; (3) Geopolitics and El Ni ñ o phenomenon greatly interfere with oil prices; (4) The one-way decline of oil price for more than one year resulted in inventory loss for more than one year. (5) Repeated outbreaks have a negative impact on global end demand
