Key investment points
Overall: last week (202205.16202205.22), the CSI 300 rose or fell by 2.23%, the Shanghai stock index rose or fell by 2.02%, and the gem index rose or fell by 2.51%. The basic chemical industry rose or fell by 4.27%, outperforming the Shanghai and Shenzhen 300 index by 2.04 percentage points, the Shanghai Stock Exchange Index by 2.25 percentage points and the gem index by 1.76 percentage points. Its weekly rise and fall ranked sixth in the Shenwan industry.
Sector: the new materials index rose or fell by 6.02% last week, outperforming the CSI 300 index by 3.79 percentage points, the gem index by 3.52 percentage points and the Shanghai Composite Index by 4.01 percentage points. In addition to carbon fiber, the prices of all sub industries in the new material index sector generally rose. The top three sub industries of this week were membrane materials (6.16%), silicone (5.89%) and lithium chemicals (5.51%), and the only sub industry with a decline was carbon fiber (- 0.56%).
Individual stocks: in the new materials sector last week, 90% of the stocks achieved positive returns, with Cngr Advanced Material Co.Ltd(300919) (20.17%), Crown Advanced Material Co.Ltd(688560) (13.38%), Zhejiang Huilong New Materials Co.Ltd(301057) (11.95%); The stocks with the largest decline were Sinofibers Technology Co.Ltd(300777) (- 6.11%), Yifan Pharmaceutical Co.Ltd(002019) (- 4.39%), Hunan Yussen Energy Technology Co.Ltd(002986) (- 2.91%).
Valuation: as of May 22, 2022, the current gem index PE (TTM) is 48.39, the average PE in the past three years is 58.57, the current new material index PE (TTM) is 29.09, the average PE in the past three years is 44.88, and the premium rate of the new material index relative to the gem index is – 39.88%.
Industry highlights
1) the EU announced the goal of achieving 600gw photovoltaic grid connection by 2030
2) Gotion High-Tech Co.Ltd(002074) won the bid for energy storage project of State Grid
3) Tianqi Lithium Corporation(002466) phase I lithium hydroxide project confirms that all parameters meet the standard of battery grade lithium hydroxide
4) Xiamen Haichen 50gwh new generation energy storage lithium battery production base will be located in Chongqing
5) Jiangsu Lidao New Material Co.Ltd(603937) plans to invest 1 billion yuan to build production lines such as battery aluminum foil
6) 3 billion yuan Eve Energy Co.Ltd(300014) re expansion
Core view
Short term perspective:
Overall, the current new material index PE (TTM) is 29.09, the premium rate relative to the gem index is – 39.88%, the average PE in the past three years is 44.88, and the current quantile of PE in the past five years is 1.46%, which is at the bottom of history. Companies in the new material sector have strong growth, and the value of sector allocation is emerging.
New military materials show a high boom demand under the counter cycle. In the environment of intensified conflict between Russia and Ukraine, global tension and multi-point outbreak in China, the downstream demand of military industry is less affected by the macro environment due to the mode of government procurement, showing the demand of counter cyclical and high prosperity. It is suggested to focus on Huaqin technology. The company is the only enterprise engaged in the R & D, production and sales of military stealth materials in the market, with strong scarcity and exclusive growth dividends in this segment.
The EU released the photovoltaic power generation doubling plan, which further improved the prosperity of the photovoltaic industry. The recent conflict between Russia and Ukraine has had an impact on the global energy supply. The EU announced a photovoltaic power generation doubling plan to increase the proportion of renewable energy. Europe is the world’s second largest photovoltaic installation market in 2021, with an increase of about 26gw, a year-on-year increase of 34%. Europe is also the largest overseas market for China’s photovoltaic module exports. In 2021, China’s exports to Europe were 45.3gw, with a year-on-year increase of 54%, accounting for 45% of China’s overall share of photovoltaic module exports. The overall prosperity of the photovoltaic industry is further improved, which is expected to drive the demand for new materials in the middle and upper reaches of photovoltaic. It is suggested to pay attention to the photovoltaic industry chain and benefit the subject matter with large-scale advantages and cost advantages.
Risk tips
The risk that the epidemic situation may cause significant market fluctuations; The risk of sharp fluctuations in the price of raw materials; Policy risk; The risk of technology development falling short of expectations; The risk of intensified industry competition.
