Key investment points
Performance of the sector this week: this week (January 4-january 7, the same below), the market composite index fell broadly. The Shanghai Composite Index closed at 3579.54, down 1.65% this week, the Shenzhen Component Index fell 3.46% this week, and the chemical sector (Shenwan) fell 3.35%. Performance of individual chemical stocks this week: the chemical sector fell broadly this week, weaker than the market. Some stocks still rose against the market, and the top gainers were Sinopec Shandong Taishan Pectroleum Co.Ltd(000554) , Xuelong Group Co.Ltd(603949) , Inner Mongoliayuan Xing Energy Company Limited(000683) , Nanjing Red Sun Co.Ltd(000525) , Yingtai Biology (delisting), Longyan Zhuoyue New Energy Co.Ltd(688196) , Jiangsu Dewei Advanced Materials Co.Ltd(300325) , Liuzhou Chemical Industry Co.Ltd(600423) , Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) , Hunan Heshun Petroleum Co.Ltd(603353) . This week, the petrochemical sector rose broadly, Sinopec Shandong Taishan Pectroleum Co.Ltd(000554) and Hunan Heshun Petroleum Co.Ltd(603353) increased by 25.33% and 10.03% respectively, of which Sinopec Shandong Taishan Pectroleum Co.Ltd(000554) led the chemical sector, with 110 gas stations owned by the company and 71 gas stations leased by the company. On January 6, Inner Mongoliayuan Xing Energy Company Limited(000683) released the performance forecast. It is expected to achieve a net profit of RMB 4.85 billion-5.05 billion in 2021, a year-on-year increase of 7022.30% – 7316.00%, and a cumulative increase of 16.3% this week.
Crude oil market dynamics this week: the market’s concern about oversupply eased, the EIA crude oil inventory continued to decline, and the crude oil price rose in an all-round way. Ice oil distribution closed at US $81.75/barrel (5.10% MoM); WTI crude oil closed at US $78.90/barrel (4.91% MoM). Tracking of key chemicals: among the chemicals we are concerned about this week, n-butanol (+ 17.78%), phenol (+ 12.07%), liquid chlorine (+ 8.80%), butyl acrylate (+ 7.86%) and DOP (+ 6.41%). This week, the parking supply side of some manufacturers of n-butanol was good, the downstream manufacturers had strong purchase intention, and the price rose broadly. Under the pressure of high cost of phenol this week, the factory raised the quotation again, and the price continued to rise. This week, the liquid chlorine emergency response to haze weather in Shandong Province reduced the burden of some enterprises and the market price continued to rise. This week, the operating rate of butyl acrylate plant was low, the cost side support was strong, and the price continued to rise. This week, the price of DOP raw material octanol rose, the operation of DOP unit picked up, and the market price of DOP rose slightly.
The steady growth policy was gradually implemented to deal with the triple pressure, and the real estate chain sector hit the bottom and rebounded: the middle and downstream demand in the chemical industry is mainly from the real estate sector, including polymerized MDI, soda ash, titanium dioxide and silicone sealant. (1) In 2021, the MDI capacity will be 3.96 million tons, and white appliances will be the largest downstream demand area, accounting for 46%. (2) Soda ash production capacity will be 34.16 million tons in 2021, and glass is the largest downstream demand field, accounting for 71%. (3) In 2021, the production capacity of titanium dioxide is 4.32 million tons, and the main downstream demand is coating, plastic and ink, accounting for 56%, 26% and 10% respectively. (4) In 2021, the production capacity of silicone sealant is 1.88 million tons, and the main downstream demand is electronic and electrical appliances, construction and textile industries, accounting for 30%, 30% and 12% respectively.
Main lines of Chemical Investment: (1) periodic growth stocks are expected to improve marginally: since the turning point of Q2 chemical boom in 2020, the prices of some chemicals have risen to historical highs. With the imbalance of supply and demand and the superposition of economic downward pressure, traditional chemical cyclical stocks made a sharp correction. We believe that we should focus on the industry leaders with continuous production expansion capacity in the 14th five year plan, supplement the price with quantity, especially the high-quality companies that embrace change and look for the second growth curve, which are expected to cross the cycle in the medium and long term. Key recommendations: Wanhua Chemical Group Co.Ltd(600309) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , satellite chemistry, China National Chemical Engineering Co.Ltd(601117) , Ningxia Baofeng Energy Group Co.Ltd(600989) , lithium iron phosphate industrial chain and soda ash industrial chain. (2) Focus on high-end manufacturing and supporting materials for high-tech industries, including biosynthesis, electronic materials, degradability, tail gas treatment, carbon fiber, etc. Key recommendations: Haohua Chemical Science & Technology Corp.Ltd(600378) , Valiant Co.Ltd(002643) . (3) For the pesticide industry chain entering the business cycle, the key recommendations are: Jiangsu Yangnong Chemical Co.Ltd(600486) , Anhui Guangxin Agrochemical Co.Ltd(603599) .
Risk warning: crude oil supply fluctuates sharply; The situation of trade war worsened; Risk of significant exchange rate fluctuations.
