Investment summary:
Talk every Monday:
The oil price remained high and the prosperity of the petrochemical sector was divided: in 2021, the annual average price of WTI crude oil was about $68 / barrel, up 72% year-on-year, and the annual average price of Brent crude oil was about $71 / barrel, up 63% year-on-year. Meanwhile, petrochemicals (CITIC) increased by 22.3% compared with CSI 300 in 2021. In 2022q1, the lower than expected increase of OPEC production and the conflict between Russia and Ukraine led to the sharp rise of oil prices. The market is worried that the high oil prices will affect the downstream refining and chemical costs, and the performance of refining and chemical and other petrochemical sectors is relatively weak, while the performance of upstream oil exploitation and oil, gas and oil service sectors is relatively good. In the first quarter, the petrochemical (CITIC) index fell 7.36%, the CSI 300 fell 14.53%, and the petrochemical (CITIC) rose 7.17% relative to the CSI 300.
The performance level increased significantly in 2021, and the net profit of revenue in 2022q1 continued to grow month on month. Petrochemical Enterprises under CITIC’s industry classification achieved an overall operating revenue of 6553.7 billion yuan in 2021, a year-on-year increase of + 32.5%; The net profit attributable to the parent company was 220121 billion yuan, a year-on-year increase of + 147.83%. 22q1 industry performance maintained a growth trend on a month on month basis, with revenue + 35.56% on a year-on-year basis and + 3.72% on a month on month basis, and net profit attributable to parent company + 25.34% on a year-on-year basis and + 133.82% on a month on month basis.
In 2022q1, the gross profit margin of the industry decreased slightly and remained relatively high: in 2021, the overall gross profit margin of the industry was 19.11%, with a year-on-year increase of 0.53pct. 2022q1opec output was lower than expected and the conflict between Russia and Ukraine. The rapid rise of oil price led to the narrowing of the price difference of some chemicals, and the overall gross profit margin of the industry was 18.71%, year-on-year -2.48pct.
Construction in progress in other petrochemical sub sectors continued to rise. The balance of construction in progress in 2022q1 totaled 16.191 billion (year-on-year + 74.22%). With the continuous operation of new large-scale refining and chemical projects, private large-scale refining and chemical enterprises have basically realized the vertical integration of production capacity. In the future, the capital expenditure will be increased, and the downstream deep processing capacity will be planned. There is still great room for development in the long term. The overall asset liability ratio is at a normal level. In 2021, the asset liability ratio of the petrochemical industry was 51.84%, with a year-on-year increase of 1.27pct, of which the asset liability ratio of other petrochemical sectors was 68.31%, ranking first, with a year-on-year increase of 1.3pct. Operating cash flow increased rapidly. In 2021, the net operating cash flow of the whole petrochemical industry reached 687288 billion yuan, a year-on-year increase of 19.07%. The cash revenue ratio was 11.49%, down 1.18 PCT year-on-year. In 2022q1, the net operating cash flow was 44.295 billion yuan, an increase of 59.856 billion yuan over the same period last year.
Investment strategy: 1) oil and gas prices remain high, driving the performance of upstream exploration and production sectors to continue to improve. It is recommended to pay attention to Petrochina Company Limited(601857) , CNOOC, Guanghui Energy Co.Ltd(600256) , and relevant oil service targets. 2) Private large-scale refining and chemical equipment has significant advantages in cost and management ability and strong certainty of long-term performance growth. It is suggested to pay attention to: Rongsheng Petro Chemical Co.Ltd(002493) , Hengyi Petrochemical Co.Ltd(000703) , Hengli Petrochemical Co.Ltd(600346) , Jiangsu Eastern Shenghong Co.Ltd(000301) , Tongkun Group Co.Ltd(601233) .
Market review:
Sector performance: this week, CITIC’s primary petroleum and petrochemical index rose or fell – 0.94%, ranking 10th among 30 industry indexes. This week, the CSI 300 index rose or fell by 0.07%, and the CITIC primary petroleum and petrochemical index was – 1.02% relative to the CSI 300 index. The rise and fall of petroleum and petrochemical sub sectors: oil exploitation (+ 1.07%), other petrochemical (- 1.40%), oil refining (- 1.57%), engineering services (- 3.82%), oilfield services (- 5.51%), oil sales and storage (- 7.38%).
Rise and fall of individual stocks: the petroleum and petrochemical sector led the rise this week, including Guanghui Energy Co.Ltd(600256) (+ 5.60%), Hengli Petrochemical Co.Ltd(600346) (+ 3.66%), Daqing Huake Company Limited(000985) (+ 2.23%), Petrochina Company Limited(601857) (+ 1.89%), Haohua Chemical Science & Technology Corp.Ltd(600378) (+ 0.65%), etc; Stocks leading the decline include Tian Jin Bohai Chemical Co.Ltd(600800) (- 15.67%), Guangdong Modern High-Tech Fiber Co.Ltd(300876) (- 13.83%), Bomesc Offshore Engineering Company Limited(603727) (- 11.93%), Shanxi Blue Flame Holding Company Limited(000968) (- 11.93%), Xinjiang International Industry Co.Ltd(000159) (- 11.62%), etc.
Risk warning: policy risk; Geopolitics exacerbates risks; Crude oil price risk; Covid-19 risk of epidemic deterioration;
