After the correction of the impact of policy environment on large-scale refining in 2021, we believe that we should focus on several private refining leaders at the beginning of 2022.
1. Approval is expected to be relaxed
China’s ethylene consumption still depends on nearly 50% of imports, so it is necessary to approve new projects. The central economic work conference proposed for the first time that “raw material energy consumption is not included in the total energy consumption control”, which brings expected marginal changes to the approval of ethylene projects.
According to the interpretation of energy statistical indicators, energy consumption used as raw materials means that energy products are not used for energy, that is, they are not used for fuel and power, but are used as raw materials for the production of another product (non energy products) or as auxiliary materials. When used as raw materials, they usually constitute the entity of this product. Therefore, we believe that “raw material energy” mainly refers to the fossil energy consumed by naphtha chemical industry, coal chemical industry, light hydrocarbon chemical industry and natural gas chemical industry, which is expected to be exempted from the total energy consumption control.
2. Downstream new material layout can also bring considerable increment
Energy transformation will drive chemical transformation. On the one hand, the slowdown in the demand for refined oil makes enterprises take the initiative to carry out “oil transformation” transformation; On the other hand, the rapid development of new energy related investment drives the demand for related chemicals. From the bottom up, there are also some new material product plans at the enterprise level. With its industrial chain supporting advantages and scale advantages, refining and chemical enterprises are expected to occupy an advantage in this part of the product competition pattern.
Taking Rongsheng Petro Chemical Co.Ltd(002493) and Hengli Petrochemical Co.Ltd(600346) as examples, the ROA of the two companies after large-scale refining and chemical production has reached about 13% annualized, and the roe has exceeded 30%. The investment scale of the two defined new projects in the future is about 50 billion. According to the existing return on investment, the profit increment can be about 6 billion.
Risk warning: risk of delayed issuance of relevant approval policies for refining and chemical projects; Business fluctuation risk of major petrochemical products; The risk that the expansion of new materials is slower than expected.
