Industry core view:
Last week, the basic chemical industry index rose by 1.13%, the Shanghai and Shenzhen 300 index fell by 1.98% in the same period, and the basic chemical industry index outperformed the market by 3.11 percentage points in the same period. The petroleum and petrochemical index fell 1.26%, outperforming the market by 0.72 percentage points in the same period. Among them, Aba Chemicals Corporation(300261) (81.53%), Xilong Scientific Co.Ltd(002584) (42.41%), Phichem Corporation(300398) (29.25%), Shandongsino-Agriunitedbiotechnologyco.Ltd(003042) (24.17%) and Great Chinasoft Technology Co.Ltd(002453) (23.01%) ranked among the top five; The companies with the top five declines were: Jiangsu Chengxing Phosph-Chemical Co.Ltd(600078) (- 17.04%), Shenzhen Sunrise New Energy Co.Ltd(002256) (- 15.11%), Changjiang materials (- 14.48%), Yanan Bicon Pharmaceutical Listed Company(002411) (- 12.80%) and Kbc Corporation Ltd(688598) (- 12.35%).
Key investment points:
Glyphosate: last week, the high level of China’s glyphosate market weakened. According to the data of Baichuan Yingfu, on January 14, the mainstream suppliers of glyphosate in the Chinese market quoted 80000-84000 yuan / ton, 95% of the transaction of raw powder referred to 77000-77500 yuan / ton, and the average price was about 77300 yuan / ton, with a slight decline in the week on week ratio. At present, the supply side of the market is sufficient, but the demand side is close to the Spring Festival, and the transaction atmosphere is cold. The prices of yellow phosphorus and glycine at the raw material end decreased, and the price difference of glyphosate remained high. In the short term, the market price of glyphosate will still have room for reduction. However, in the medium and long term, considering that the glyphosate inventory in the market is still relatively low, the follow-up will enter the replenishment stage of Chinese downstream manufacturers, there is still strong demand for overseas export orders, and the increase in demand for glyphosate after the liberalization of China’s genetically modified crops in the long term, the glyphosate price is expected to remain relatively high for a long time.
Hydrofluorocarbons: Recently, the notice on strict control of the first batch of hydrofluorocarbon chemical production and construction projects jointly issued by the Ministry of ecological environment, the national development and Reform Commission and the Ministry of industry and information technology lists the first batch of five hydrofluorocarbons (HFCS), mainstream third-generation refrigerants R32, R134a, R125 and r143a, and the third-generation foaming agent R245fa. The notice limits the capacity expansion of the above categories of products and the addition of HFCS in other categories. The issuance of this notice is to ensure that the Kigali amendment, which officially entered into force and binding on China in September 2021, can better achieve the performance goal and strictly control chemicals with high global warming potential (GWP). Under the background of strict policy supervision and difficult promotion of a new generation of refrigerants and foaming agents replacing HFCS in the short term, we believe that the price and profit margin of HFCS products are in the bottom reversal trend, and we suggest paying attention to relevant leading enterprises.
Investment suggestion: in 2022, we will mainly recommend three main investment lines: 1 In the context of policy control, production and supply are becoming more stringent, while the demand side is still supportive in various sub sectors, such as pesticides, fertilizers and refrigerants; 2. Rely on new energy, seek industrial transformation and upgrading from upstream materials, lengthen its business cycle and improve its valuation, such as phosphorus chemical industry; 3. High value-added new materials with significant trend of domestic substitution, such as semiconductor materials and display materials, which are mainly planned during the 14th Five Year Plan period.
Risk factors: the risk of continuous fluctuation of international crude oil price, the risk of repeated impact of epidemic situation in some parts of China on enterprise operation, and the risk of fluctuation of chemical product price.
