Core conclusion
Since 1999, China has experienced five rounds of stagflation and seven rounds of PPI upward. We have recovered the impact of inflation on the profitability of various industries in two cases.
Profit performance of various industries in stagflation period (GDP fell with the same growth for two consecutive quarters and CPI rose year-on-year). Stagflation sensitivity of profitability of various industries: upstream midstream downstream. In most cases, during the stagflation period, the gross profit margins of the upstream, middle and downstream will go through the process of "repairing first and then improving", with the maximum sensitivity in the upstream, the second in the middle and the most stable in the downstream.
Upstream: there is a profit seesaw in mining and raw material manufacturing. In stagflation period, but when PPI is strong, most of the profits of mining industry rise and most of the profits of raw material manufacturing industry fall; In stagflation period, but when PPI weakens, most of the profits of mining industry fall and most of the profits of raw material manufacturing industry improve. The profit changes of the oil and gas mining industry in the mining industry and the oil, coal and other fuel processing industry in the raw material manufacturing industry often show a state of "one ebb and flow".
Midstream: the net interest rate elasticity of special equipment manufacturing industry, instrument manufacturing industry and other industries is large. There is no steady law for the improvement of equipment manufacturing profits, but the change direction of each round of sub industries is relatively similar, and there are only elastic differences. The industries with large gross profit margin elasticity are railway, ship, aerospace and other transportation equipment manufacturing, electrical machinery and equipment manufacturing, and the industries with large net profit margin elasticity are special equipment manufacturing and instrument manufacturing.
Downstream: the elasticity of daily consumption and public utilities is large, and most of them are in the opposite direction.
Earnings performance of various industries in the upward period of PPI.
PPI year-on-year is positively correlated with upstream profits and negatively correlated with midstream and downstream profits. During the upward period of PPI, the profits of upstream industries increased significantly without exception; The profits of the midstream industry basically fell; The profits of downstream industries may fall or rise, but the profit fluctuation is obviously more moderate than that of the midstream.
Upstream: the profit of the mining industry has improved, and the oil mining industry has benefited the most; The profitability of the raw material manufacturing industry deteriorated, and the petroleum processing industry suffered the most.
Midstream: the overall profit is damaged, and the instrument manufacturing and electrical equipment are more resilient. During the upward period of PPI, the profits of most industries were damaged, the instrument manufacturing industry, electrical machinery and equipment manufacturing industry were more resilient, and the computer, communication and other electronic equipment manufacturing industry was the most severely damaged.
Downstream: the profits of most industries are damaged, daily consumption and industrial consumption are very resilient, and public utilities are seriously damaged. During the upward period of PPI, the profits of most industries were damaged, but the daily consumer goods were quite stable and the absolute profits remained high. The industrial consumer goods were also relatively stable. The profits of optional consumer goods were damaged, especially in public utilities and other industries.
Risk warning: commodity price fluctuations exceed expectations; China's inflation exceeded expectations; Monetary policies of various countries exceeded expectations; The profitability of various industries and their sensitivity to inflation exceeded expectations.
