Key investment points:
This week, the prosperity index of Guohai chemical industry was 164.04, up 3.79 month on month. Comprehensively consider the operation and prosperity of chemical enterprises, and give the industry a “recommended” rating.
Investment suggestion: invest in the subject matter with expansion capacity, the subject matter of downstream industries and the subject matter of new energy materials.
The central economic work conference requires that next year’s economic work should be stable and seek progress while maintaining stability, that all regions and departments should shoulder the responsibility of stabilizing the macro economy, that all parties should actively launch policies conducive to economic stability, and that the policy force should be appropriately advanced. A stable economic environment is more favorable to leading enterprises. Looking forward to 2022, we believe that chemical industry leaders, downstream industries and new material industries are the key directions. This year, the problem of suppressing the capacity expansion of leading enterprises is expected to be gradually alleviated, the loss of profits in downstream industries due to high raw material costs will be alleviated, and the new material industry will be driven by new energy and emerging industries to usher in a good opportunity for development.
The tire industry has entered the strategic layout period. We judge that 2021q3 is the lowest point of the industry. In 2021q4 and 2022q1, the profits of the tire industry begin to improve. Based on three judgments, first, the supply shrinks and small and medium-sized tire enterprises begin to shut down. According to the data of Zhuo Chuang information, the operating rate of Shandong semi steel tire enterprises was 59.4% on January 13, 2022, The operating rate under normal circumstances is about 70%, that of Shandong all steel tire enterprises is 59.1%, and that under normal circumstances is more than 70%. Dual control and negative cash flow are two reasons, especially the net operating cash flow of some listed companies in the second quarter of 2021 has turned negative; Second, the price of sea freight has been loosened. This week, the FBX index from China to western US ports was US $13632.53/feu, down 3.11% from last week; The FBX index from China to Meidong port was USD 16704.86/feu, down 0.55% from last week; Third, in December 2021, China’s monthly output of commercial vehicles was 380000, an increase of 7.7% month on month, the output of automobiles was 2.91 million, an increase of 12.5% month on month, and the output of trucks was 331000, an increase of 6.9% month on month. The bottom of the tire is reversed. Under the background of supply contraction and demand improvement, according to incomplete statistics of China tire commercial WeChat official account, 15 tire enterprises announced the price increase in 2022. Overall, the price increase of this round is more than 2%-5%, and the highest increase is 10%. Nine tire enterprises in foreign markets have announced price increases, with a maximum price increase of 16%. We believe that the profit margin level of tires will gradually recover. In the long run, Chinese tire enterprises have outstanding cost performance advantages in the middle and low-end market, import substitution in the high-end market through channel forces, and the two major trends of internationalization and branding are irreversible. They focus on Shandong Linglong Tyre Co.Ltd(601966) , Sailun Group Co.Ltd(601058) , Qingdao Sentury Tire Co.Ltd(002984) . These three enterprises have a significant expansion of overseas production capacity in 2022, as well as rubber additive enterprises Shandong Yanggu Huatai Chemical Co.Ltd(300121) and conveyor belt enterprises Zhejiang Double Arrow Rubber Co.Ltd(002381) .
Wanhua Chemical Group Co.Ltd(600309) has entered the rapid expansion period. We believe that the core means to achieve the carbon peak and carbon neutralization goals of the chemical industry is to use technological innovation to bring changes in energy structure, energy consumption level, raw material structure and product structure. Technological innovation is the key, and innovation can continue to grow. The R & D cost of Wanhua Chemical Group Co.Ltd(600309) in the third quarter of 2021 reached 930 million yuan, The construction in progress is 28.1 billion yuan, accounting for 46% of the fixed assets, of which the cash inflow of fixed assets purchased and constructed in the third quarter reached 7.6 billion yuan, reaching a record high. According to the environmental impact assessment, Wanhua Fujian Industrial Park plans to expand the MDI project to 1.6 million tons / year (Wanhua isocyanate company), and the TDI project to 360000 tons / year (Wanhua Fujian), Wanhua Chemical Group Co.Ltd(600309) enters the rapid expansion period. We expect that 10000 tons of ternary battery materials and 60000 tons of biodegradable polyester materials will be put into operation in 2022, bringing new catalysts. Under the dual carbon background, Wanhua Chemical Group Co.Ltd(600309) MDI, as an excellent thermal insulation material, is expected to usher in the demand explosion period. Moreover, the company focuses on Wanhua Chemical Group Co.Ltd(600309) because of its R & D and innovation ability, capacity expansion and worry free growth.
The prosperity of phosphorus chemical industry is sustainable, and the transformation of new energy is in progress. The price of phosphate rock continued to rise, from 350 yuan / ton at the end of 2020 to 627.5 yuan / ton at present, an increase of 79%; The wet process industrial monoammonium in Southwest China was adjusted from 5300 yuan / ton on September 23, 2021 to 5543 yuan / ton on January 14, 2022, and reversed upward again; The price of yellow phosphorus was adjusted back to 31000 yuan / ton, up 30% from 23500 yuan / ton in August 2021; Enterprises with industrial chain integration benefit. In addition, the export volume of monoammonium phosphate, diammonium phosphate and compound fertilizer decreased significantly in August 2021, and the export was limited. As a compound fertilizer industry with squeezed terminal profits, the profits gradually improved. In the first half of 2022, both Xinyangfeng Agricultural Technology Co.Ltd(000902) and Guizhou Chanhen Chemical Corporation(002895) iron phosphate will be implemented, and the phosphorus chemical industry chain is still in the transition period from traditional chemical fertilizer industry to new energy materials. We focus on phosphorus chemical enterprises with industrial chain integration and fast transformation speed, including Xinyangfeng Agricultural Technology Co.Ltd(000902) , Guizhou Chanhen Chemical Corporation(002895) , Chengdu Wintrue Holding Co.Ltd(002539) , Yunnan Yuntianhua Co.Ltd(600096) , Hubei Xingfa Chemicals Group Co.Ltd(600141) , Shenzhen Batian Ecotypic Engineering Co.Ltd(002170) , Hubei Yihua Chemical Industry Co.Ltd(000422) , Shanghai Zhongyida Co.Ltd(600610) and other enterprises. Shanghai Zhongyida Co.Ltd(600610) merger draft has been released.
Satellite chemical phase I ethylene project is gradually put into operation. According to Xinhua news agency, China and the United States have agreed to increase the export of agricultural products and energy from the United States. Satellite chemical will be encouraged to import ethane from the United States. The continuous implementation of satellite chemical light hydrocarbon integration project deserves special attention.
The leading development of coal chemical industry has ushered in a turnaround. With the relaxation of raw material energy consumption policy, the coal chemical projects blocked in the early stage are expected to be implemented, and the growth of enterprises such as Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , Ningxia Baofeng Energy Group Co.Ltd(600989) , Luxi Chemical Group Co.Ltd(000830) is prominent. Private refining ushered in a good opportunity for development. The large-scale refining and chemical projects gradually extend downstream, and a series of new chemical material projects are expected to be implemented, focusing on 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) and other enterprises.
At the same time, pay attention to Jiangsu Yangnong Chemical Co.Ltd(600486) with the sharp rise in the price of Kungfu pyrethrin, Anhui Jinhe Industrial Co.Ltd(002597) with the continuous rise in the price of sugar substitutes, Shandong Sinocera Functional Material Co.Ltd(300285) and Valiant Co.Ltd(002643) that can still maintain the performance growth under the pressure of the rise in the price of raw materials, and Lb Group Co.Ltd(002601) expanding to new energy materials.
Chemical industry leaders are the kings of the future. According to our observation, there are a number of leading companies in China’s chemical industry. Compared with international competitors, they show obvious efficiency advantages in terms of rate of return, labor efficiency and turnover. The slowdown of China’s GDP growth and the control of carbon emissions in the future have led to the concentration of resources in all aspects to the leading chemical enterprises, superimposed with intelligent manufacturing, R & D and innovation, and the increase of the leading market share is accelerating. At present, we believe that China’s leading companies have the ability to plan a global blueprint and move towards global leaders.
We suggest that we should work with excellent enterprises and invest in those enterprises with efficient execution. This efficient ability will make the profitability of Chinese enterprises higher than that of international competitors, with higher rate of return and larger scale in the future. Therefore, the market value of foreign giants is far from the ceiling of Chinese enterprises. For example, Wanhua Chemical Group Co.Ltd(600309) , which is building an integrated industrial chain, continuously increasing R & D investment, multi category expansion and moving forward to a first-class chemical new material company with global operation, has made a synchronous breakthrough in original replacement, China and foreign countries go hand in hand, and is aiming at the top five Shandong Linglong Tyre Co.Ltd(601966) in the global tire industry in 2030, with high starting point, high standard Build Hengli Petrochemical Co.Ltd(600346) and Rongsheng Petro Chemical Co.Ltd(002493) of world-class refineries with high efficiency. We focus on the leaders in various sub sectors that are still undervalued, such as Wanhua Chemical Group Co.Ltd(600309) , the leader in the tire industry Shandong Linglong Tyre Co.Ltd(601966) , and Sailun Group Co.Ltd(601058) and Qingdao Sentury Tire Co.Ltd(002984) , private refining giants ( Hengli Petrochemical Co.Ltd(600346) , Rongsheng Petro Chemical Co.Ltd(002493) , Jiangsu Eastern Shenghong Co.Ltd(000301) , Tongkun Group Co.Ltd(601233) , Hengyi Petrochemical Co.Ltd(000703) , Xinfengming Group Co.Ltd(603225) ), the leader in the field of compound fertilizer Xinyangfeng Agricultural Technology Co.Ltd(000902) and Chengdu Wintrue Holding Co.Ltd(002539) , the leader in rubber additives Shandong Yanggu Huatai Chemical Co.Ltd(300121) Viscose staple fiber leader Tangshan Sanyou Chemical Industries Co.Ltd(600409) , vitamin leader Zhejiang Nhu Company Ltd(002001) , coal chemical leader Shandong Hualu-Hengsheng Chemical Co.Ltd(600426) , new coal chemical leader Ningxia Baofeng Energy Group Co.Ltd(600989) , pesticide leader Jiangsu Yangnong Chemical Co.Ltd(600486) , glyphosate leader Lier Chemical Co.Ltd(002258) , inorganic new material leader Shandong Sinocera Functional Material Co.Ltd(300285) , satellite chemistry in C2 / C3 field, sweetener leader Anhui Jinhe Industrial Co.Ltd(002597) , plant growth regulator leader Sichuan Guoguang Agrochemical Co.Ltd(002749) , titanium dioxide leader Lb Group Co.Ltd(002601) Spandex and adipic acid leader Huafon Chemical Co.Ltd(002064) , organic fine chemicals leader Valiant Co.Ltd(002643) , dicamba enterprise Jiangsu Changqing Agrochemical Co.Ltd(002391) , grease chemical leader Zanyu Technology Group Co.Ltd(002637) , etc.
The U.S. Department of Commerce issued a statement on May 15, 2020 local time, saying that the strategic position of semiconductor materials has become increasingly prominent by comprehensively restricting Huawei’s purchase of semiconductors produced with U.S. software and technology. It is suggested to pay attention to Rayitek Hi-Tech Film Company Ltd.Shenzhen(688323) , Jiangsu Yoke Technology Co.Ltd(002409) , Jingrui shares, Changzhou Tronly New Electronic Materials Co.Ltd(300429) , Jiangyin Jianghua Microelectronics Materials Co.Ltd(603078) , Zhejiang Juhua Co.Ltd(600160) , Haohua Chemical Science & Technology Corp.Ltd(600378) , Hubei Dinglong Co.Ltd(300054) and other enterprises. In addition, we hope that the new materials will continue to expand continuously, and have strong technical content of polymer anti-aging leader Rianlon Corporation(300596) , thermoplastic elastomer head Shandong Dawn Polymer Co.Ltd(002838) , brine extraction lithium technology leader Sunresin New Materials Co.Ltd Xi’An(300487) .
Industry price trend
According to wind, as of Friday, Brent and WTI futures prices closed at US $86.47 and US $84.27/barrel respectively, with a week on week ratio of + 5.54% and + 6.75%.
The EIA crude oil inventory continued to decline beyond expectations this week, tightening supply and comprehensively rising crude oil prices. In the early part of the week, the supply of some OPEC oil producing countries in Libya was interrupted, the situation in Kazakhstan was tense, and the market expected that the production capacity was limited or the supply was tightened. At the same time, the market expected that the overall impact of Omicron virus strain on the demand side was limited. However, the number of new non-agricultural employment in the United States in December was much lower than expected, which may have an impact on the Fed’s policy, and the recovery of the economy was still slow due to the restrictions of the epidemic, The market supply and demand situation was adjusted, and the crude oil price rose first and then fell. In the late part of the week, the U.S. crude oil inventory fell for the seventh consecutive week, and the market supply continued to tighten. At the same time, some oil producing countries continued to face bottlenecks in increasing production, and the oil supply was expected to tighten. In addition, the weakening of the US dollar supported the oil price, and the crude oil price continued to rise.
Risk tips: macroeconomic changes; Oil price fluctuation; Environmental protection and relaxation; The economy fell sharply; The product price fluctuates greatly; Focus on the company’s performance not meeting expectations.
