Supply And Demand Are Both Good, And The Profitability of Chemical Companies Has Increased Significantly

Since the first three quarters of this year, benefiting from the restoration of the global economy, the shortage of supply, and the major changes driven by oil as a global pricing driver, the chemical industry has generally maintained a high level of prosperity, with significant growth in performance.

Relevant data shows that in the first three quarters of 2021, the overall operating income of Shenwan Chemical Industry was 4131.06 billion yuan, a year-on-year increase of 33.9%. 92.4% of listed companies had a positive year-on-year growth rate; the total net profit attributable to the parent was 275.47 billion yuan, a year-on-year increase 49.1% and 70.8% of listed companies have a positive year-on-year growth rate.

Chen Li, chief economist and director of the Institute of Chuancai Securities, pointed out that under the background of "dual control of energy consumption", the production capacity of some chemical products is subject to certain restrictions. On the demand side, especially the chemical industry related to new energy, the industry is booming. As a result, the demand for related products remains high. Therefore, the price increase of chemical products in the third quarter has obvious characteristics, and the overall performance of industry companies is good.

The industry income level has increased significantly

In the third quarter, due to rising energy and raw material prices, under the influence of dual control of energy consumption, some companies were limited in starting operations, and the prices of chemical products continued to be high. Data showed that the chemical industry as a whole achieved operating income of 1516.02 billion yuan in the quarter, and the overall industry revenue increased month-on-month. 7.6%, among the listed chemical companies, the median revenue change from the previous month was 2.3%, and 55.3% of the listed companies had positive revenue growth from the previous month. The overall net profit of the chemical industry attributable to the parent was 96.86 billion yuan, a decrease of 2.6% from the previous month. Among the listed chemical companies, the median change of the net profit attributable to the parent was -12.0%, and the growth rate of the net profit attributable to the parent of 37.7% of the listed companies was positive.

In terms of industry profitability, the overall gross profit margin and net profit margin of the industry in the third quarter were 20.2% and 6.8%, respectively, which decreased by 1.1% and 1.2% from the second quarter; the percentages of the gross and net profit margins of listed chemical companies that rose respectively It is 36.3% and 35.7%. In the third quarter, the overall sales expense ratio, management expense ratio, and financial expense ratio of the chemical industry in the third quarter were 2.2%, 2.9%, and 0.8%, respectively. The quarter-on-quarter changes were -0.1%, 0.0%, and -0.1%; among listed chemical companies, sales expenses The percentages of the month-on-month decrease in the rate, management expense rate, and financial expense rate were 41.2%, 37.7%, and 64.9%, respectively.

"From the quarter-on-quarter data, the overall industry income level has increased significantly from the previous month, but profitability has declined slightly, and expense management capabilities need to be improved," said Chen Yi, China National Securities.

Subdivision areas such as yellow phosphorus show brilliant performance

From the perspective of the subdivision of the chemical industry, listed companies in the fields of yellow phosphorus, glyphosate, and titanium dioxide have performed outstandingly.

Data monitored byEverbright Securities show that as of the end of the third quarter of 2021, the China Chemical Product Price Index (CCPI) was 5,917 points, an increase of approximately 13.1% from the beginning of September 2021. Among the 136 chemical products tracked, the prices of 4 varieties of silicon metal (Kunming), liquid chlorine (Jiangsu), yellow phosphorus (Yunnan), and caustic soda (Jiangsu) increased by more than 100% in September. The price of fluorine refrigerant R134a, organic The prices of silicon DMC, acetic anhydride, thermal coal, and acetic acid have increased by more than 50%.

Taking the leading phosphate fertilizer company Yuntianhua as an example, the company achieved operating income of 47.632 billion yuan in the first three quarters, a year-on-year increase of 19.35%; net profit attributable to shareholders of listed companies was 2.840 billion yuan, a year-on-year increase of 2583%.

According to data from the National Bureau of Statistics on October 25, the price of glyphosate was 7,7937.5 CNY/ton in mid-October 2021, compared with 28,470 CNY/ton in early January 2021, an increase of nearly 200%. Affected by this, relevant listed companies have outstanding performance in the three quarterly reports.

In the first three quarters, Hebang Bio, which is mainly engaged in the sales of glyphosate, achieved operating income of 7.068 billion yuan, an increase of 81.52% year-on-year; realized net profit attributable to shareholders of listed companies of 2.013 billion yuan; deduction of non-recurring gains and losses attributable to shareholders of listed companies The net profit increased by 1129.21% year-on-year. Among them, the net profit attributable to shareholders of listed companies was 1.099 billion yuan in the third quarter.

Soochow Securities Research Report pointed out that the double control policy of energy consumption has been accelerated, and the production of raw material yellow phosphorus has been greatly restricted or out of stock. It is expected that the production of yellow phosphorus in the fourth quarter of 2021 may be significantly restricted, and the cost will continue to increase the price of glyphosate.

Strong growth in new energy-related sectors

It is worth mentioning that the individual stocks and sub-sectors that performed well in the first three quarters are closely related to the new energy sector. The sectors with high performance and market attention are soda ash, chlor-alkali, phosphorous chemicals and fluorine chemicals.

According to the analysis of Guojin Securities, the main reason is that product prices have risen sharply under the background of both supply and demand, which makes profit margins continue to rise. Among them, the demand side of soda ash benefits from the drive of photovoltaic glass while the supply side is relatively rigid, so the industry's prosperity continues to rise; the phosphorous chemical industry is due to the strong demand for lithium iron phosphate, which leads to upstream phosphate rock, ammonium phosphate and The consumption of raw materials such as phosphoric acid has continued to increase, and the industry has entered a boom cycle; fluorine chemicals have also benefited from the rapid development of the new energy industry. The fluorine-containing polymer material PVDF and fluoride salt lithium hexafluorophosphate can be used as lithium battery cathode materials and bonding materials, respectively. The industry's attention has been greatly increased under the promotion of the downstream new energy track.

It is expected that the chemical industry will continue to improve in the fourth quarter. Bank of China Securities pointed out that looking forward to the fourth quarter, chemical product prices will fluctuate more and more. Under the background of carbon neutrality, the industry concentration will continue to increase. Long-term optimistic about the development of leading companies under the background of carbon neutrality. On the other hand, benefiting from the rapid growth of downstream demand, attention to semiconductors and new energy materials continues to increase. Maintain the industry outperform rating.