Oil prices continued to rise, PetroChina’s performance hit a seven-year high and continued to be optimistic about the prosperity of the petrochemical sector: on the crude oil supply side, although the supply impact caused by bad weather and geopolitics gradually recovered, the lack of idle capacity in OPEC + member countries had a greater impact on crude oil supply, the global crude oil supply was tight and the space for increasing production was limited. On the demand side, despite the fierce outbreak of Omicron, the R & D and delivery of effective drugs are also continuing. The market’s concern about crude oil demand is gradually alleviated, and the global crude oil demand will maintain a recovery trend. In addition, offshore crude oil has become the main force in the growth of China’s crude oil production. According to the China marine energy development report 2021 issued by the Energy Economics Research Institute of CNOOC Group, China’s offshore oil and gas production reached a new high in 21 years. It is expected that the offshore crude oil production will increase to 54.64 million tons, exceeding the historical high in 2015, and the increment of offshore crude oil production will exceed 80% of the national increment. The supply and demand pattern of crude oil is good in 22 years, the oil price is expected to remain high, continue to be optimistic about the prosperity of the petrochemical sector, and the upstream oil and gas, oil service and private large refining and chemical companies are expected to fully benefit. This week, PetroChina released the performance forecast for 2021. It is expected to realize a net profit attributable to the parent company of 90-94 billion yuan in 21 years, with a year-on-year increase of 374% – 395%. The company’s oil and gas business has been steadily promoted. The sales of main oil and gas products have increased both volume and price, superimposed cost reduction and efficiency increase, and the company’s performance in 21 years has increased significantly year-on-year, reaching a new high in recent seven years.
The goal of “steady growth” is clear, and we are optimistic about the white horse, the leader of undervalued value represented by private large-scale refining: “steady growth” policy has been frequently emphasized recently, and the policy is expected to accelerate its implementation. We have three interpretations: 1) stabilizing industrial economic growth is the core task of “stabilizing growth”. As an important part of industrial economy, the chemical industry will become one of the footholds for China to achieve the goal of stable economic growth. 2) Under the main tone of “steady growth”, domestic demand expanded and boosted the midstream scenery of the chemical industry. 3) Energy consumption dual control approval adjustment superimposed on the implementation of the “steady growth” policy, the approval margin of high-quality chemical projects was relaxed, and the expectation was enhanced. Under the background of “steady growth”, we believe that the performance of the original business of the chemical industry leader is expected to continue to shine in the future. At the same time, the improvement of the downstream industrial chain layout will bring considerable performance increment, and the improvement of the industrial chain layout will also reduce the performance volatility. Therefore, Baima, the leader represented by private refining, will still have high growth in the future. At the current time point, the leading white horse represented by private refining has the characteristics of “undervalued value + high growth” and has high investment value.
Weekly rise and fall of sectors: in the past five trading days, most sectors in Shanghai and Shenzhen stock markets showed a decline. This week, the Shanghai Composite Index fell by 1.63% and the Shenzhen Component Index fell by 1.35%. CITIC basic chemical sector rose by 1.1%, ranking fifth in all sectors. In the past five trading days, the sub sectors of the chemical industry have been mixed. The top five sub sectors are soda ash (+ 9.6%), electronic chemicals (+ 7.3%), lithium chemicals (+ 6.0%), silicone (+ 4.9%) and pesticides (+ 3.9%).
Rise and fall of individual stocks: in the past five trading days, the top gainers of basic chemical industry are: Aba Chemicals Corporation(300261) (+ 81.53%), Xilong Scientific Co.Ltd(002584) (+ 42.41%), Phichem Corporation(300398) (+ 29.25%), Shandongsino-Agriunitedbiotechnologyco.Ltd(003042) (+ 24.17%), Great Chinasoft Technology Co.Ltd(002453) (+ 23.01%).
Investment suggestions: (1) the upstream oil and gas sector is recommended to pay attention to Petrochina Company Limited(601857) , China Petroleum & Chemical Corporation(600028) , CNOOC and Enn Natural Gas Co.Ltd(600803) and other oil service targets. (2) White horse, the leader of undervalued chemical industry: it is suggested to pay attention to ① three chemical white horses: Wanhua Chemical Group Co.Ltd(600309) , Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , Jiangsu Yangnong Chemical Co.Ltd(600486) ; ② Private refining and chemical fiber sector: Hengli Petrochemical Co.Ltd(600346) , Rongsheng Petro Chemical Co.Ltd(002493) , Jiangsu Eastern Shenghong Co.Ltd(000301) , Hengyi Petrochemical Co.Ltd(000703) , Tongkun Group Co.Ltd(601233) , Xinfengming Group Co.Ltd(603225) ; ③ Light hydrocarbon cracking sector: Satellite chemistry, Oriental Energy Co.Ltd(002221) ; ④ Coal to olefin: Ningxia Baofeng Energy Group Co.Ltd(600989) . (3) New materials: it is recommended to pay attention to ① semiconductor materials: Crystal Clear Electronic Material Co.Ltd(300655) , Red Avenue New Materials Group Co.Ltd(603650) , Guangdong Huate Gas Co.Ltd(688268) , Jiangsu Yoke Technology Co.Ltd(002409) , Haohua Chemical Science & Technology Corp.Ltd(600378) , Jiangsu Nata Opto-Electronic Material Co.Ltd(300346) , Jiangyin Jianghua Microelectronics Materials Co.Ltd(603078) , Tianjin Jiuri New Materials Co.Ltd(688199) , Hubei Dinglong Co.Ltd(300054) ; ② Wind power materials: carbon fiber, polyether amine, matrix resin, interlayer materials, structural adhesive and other related enterprises; ③ Lithium battery materials: electrolyte, lithium battery diaphragm, phosphorus chemical industry, fluorine chemical industry and other related enterprises; ④ Photovoltaic materials: upstream silicon materials, EVA, soda ash and other related enterprises; ⑤ OLED industry chain: Valiant Co.Ltd(002643) , Xi’An Manareco New Materials Co.Ltd(688550) , Jilin Oled Material Tech Co.Ltd(688378) , Puyang Huicheng Electronic Material Co.Ltd(300481) . (4) Traditional cycle sector: it is recommended to pay attention to relevant targets in the fields of pesticides, coal chemical industry, urea, dyes, vitamins, chlor alkali, etc.
Risk analysis: the risk of rapid decline and high oil price; Downstream demand is less than expected risk.
