chemical companies will improve the performance of leading enterprises

March 21, the explosion of Xiangshui led to a doubling of m-phenylenediamine. As the leader of the domestic dyestuff industry, Longsheng, Zhejiang Province, continued to soar yesterday and closed up again. Since March 22, it has achieved five stops in just eight trading days, with the share price range rising more than 80%.

Zhejiang Longsheng announced last night that the deviation value of the daily closing price of the company's stock in three consecutive trading days totaled 20%, constituting stock price fluctuation. At present, the production of inter-company phenylenediamine products is normal, its sales revenue in 2018 accounted for 5.21% of the company's total revenue, accounting for a small proportion, and the impact on profits is also small. In addition, due to the rising prices of most raw materials, the company has recently made appropriate adjustments to the quotations of domestic dyes and resorcinol products.

The chemical industry plate which was relatively stagnant before this week ushered in a large-scale explosion. Excluding the new shares listed yesterday, a total of 37 chemical stocks rose by more than 5%, of which 18 rose or stopped, including Rongtu Share (002440), Guangxin Materials, HuaSoft Technology, Lanfeng Biochemical (002513), Cangzhou Dahua (600230), Tianyuan Group (002386), Yuanli Share (300174), Qingdao Shuangxing (000599), etc. Industry analysts believe that environmental protection requirements and strict screening of safety in production after the explosion of Jiangsu chemical plant will have a profound impact on the supply and demand situation of the whole industry, which is equivalent to the supply side reform of the chemical industry, resulting in the concentration of product prices and competitive advantages to large and medium-sized enterprises, and the active state of the chemical industry is still sustainable.

Chemical stocks belong to the cycle stocks with high threshold, especially some varieties have valuation basis, performance flexibility, but also have technology or environmental protection moat, so they are favored by funds. According to the information released by the exchange, the net inflows of funds were received by International Industry (000159), Runtou Share, Qingdao Shuangxing and Yongguan New Materials yesterday, with the net inflows of 95.03 million yuan and 62.63 million yuan for International Industry and Runtou Share. However, Zhejiang Longsheng, which has been soaring in succession, had a net outflow of 110 million yuan yesterday.

Among them, Shenzhen Stock Exchange's special seats purchased 58.844 million yuan of Rongtu shares and sold 35.7149 million yuan at the same time, while Shanghai Stock Exchange's special seats purchased 44.37 million yuan of Longsheng, Zhejiang.

Galaxy Securities is also the main purchaser of chemical stocks. Yesterday, as a buy-one or buy-two, the Shaoxing Securities Business Department of Galaxy Securities and the Daqing South Road Securities Business Department of Galaxy Securities in Ningbo bought 236 million yuan and 235 million yuan of Longsheng, Zhejiang. Shaoxing Securities Business Department of Galaxy Securities bought 53.81 million yuan of international industry as one purchase.

April is an annual report and quarterly report intensive disclosure period. With the general rise of some stocks, capital is alert to unexpected "thunderbolt" and tends to look for performance support and stagnation markers, so the chemical sector is expected to continue to be strong. Cheng Lei, a securities analyst at New Age, believes that due to adverse factors such as international oil prices and Sino-US trade frictions, the prices of bulk cyclical commodities fell in the second half of 2018, and the profits of relevant chemical enterprises declined. Looking forward to the quarterly report of 2019, most chemical enterprises'performance will decline year on year, which has been fully anticipated by the current market. However, some subdivisions have reached the bottom in the fourth quarter of 2018, and the leading companies' quarterly reports are expected to rise in the supermarket market. For example, the supply and demand of the pesticide industry continue to benefit from the high pressure of domestic environmental protection, and the release of production capacity of leading enterprises will bring about rapid growth of performance.

Price increase contributed to the expected growth of performance. For example, affected by the explosion accident in northern Jiangsu, the dyestuff industry has re-entered a tight balance between supply and demand, and the price of products is expected to continue to rise when the peak demand season comes.

Under the tight balance between supply and demand, the price of products continued to rise, and the profits of leading enterprises would be greatly improved. Taking Longsheng, Zhejiang Province as an example, it has 65,000 tons of m-phenylenediamine (taking out only 25,000 tons) and 130,000 tons of disperse dye production capacity. According to the calculation, if the price rises by 10,000 yuan, the company's performance elasticity will be 200,000 yuan and 900,000 yuan respectively. Assuming that the price of m-phenylenediamine rises to 100,000 yuan and the price of dyes rises by 10,000 yuan, the company's performance is expected to increase by 2 billion yuan. According to the statistics of

Tonghuashun, 117 chemical enterprises have published their annual report results in 2018, of which 84 have positive net profit growth over the same period of last year, accounting for more than 70%. There are 20 companies whose net profit increased by more than 100% year on year. At present, the net profit growth rate of Jianxin Stock (300107) ranks the first. Its annual report of 2018 was issued on the evening of March 14. The company realized its business income of 1.418 billion yuan in 2018, an increase of 16.467% over the same period of last year, and realized net profit of attribution of 656 million yuan, an increase of 65.38% over the same period of last year. Performance growth is due to ODB2, m-aminophenol sales and higher sales prices.