Huatai Securities - annual strategy of chemical industry in 2020

The development of the information industry has entered a new normal. The main investment line focuses on the deterministic chemical industry, which continues the downward trend of the boom since 2018, and further falls back in the profitability level of 2019q3. The domestic demand is expected to improve gradually in the future, and the trade friction intensifies the uncertainty of external demand, but it is good for the process of fine chemicals and new materials import substitution. Safety and environmental protection accidents are frequent The threshold of new production capacity has been raised continuously, and it is concentrated in leading enterprises, and the supply side is expected to usher in reconstruction; the overall international oil price remains strong, which is conducive to the overall price trend of chemicals. It is expected that the overall prosperity of the chemical industry will fluctuate and decline, and the share of leading enterprises will continue to increase, which will further drive the industry towards integration and concentration.

Promising main lines include: 1) new petrochemical industries such as private refining and light hydrocarbon cracking; 2) booming sub industries such as vitamins and pesticides; 3) leading enterprises in traditional industries; 4) emerging fields such as fine chemicals and new materials. Private oil refining and chemical integration: the integration project entered the production and production period, leading enterprises occupy the industrial chain highland, the private refining and chemical facilities were successfully constructed, and gradually entered the commissioning stage. The production facilities have been profitable, and the advanced competitiveness of the private mechanism and technology has created a strong comprehensive competitive advantage, and the profitability increase has a strong certainty. The traditional business polyester filament and PTA are generally profitable and integrated. The industry chain has a good synergistic effect, with relevant companies Hengli, Tongkun, Hengyi and Rongsheng. Light hydrocarbon cracking: the profit prospects of PDH and ethane cracking are good, the price of raw materials is expected to remain low while the demand for olefins in the downstream is expected to increase steadily, and the profit of PDH industry is expected to increase steadily with the strong crude oil price; the profit prospects of ethane cracking project are good; the value of hydrogen resources is increased or the overall profitability of light hydrocarbon cracking unit is improved, and Wanhua chemical and satellite Petrochemical are related companies. Vitamin: after breeding, most of the beneficial varieties focus on vitamin E and vitamin A, showing an oligarchic competition pattern.

The overall supply is greater than the demand. Under the influence of classical swine fever, the product price continues to fall deeply. At present, the price of pigs is high, and the vaccine development progress is fast, and the follow-up market supplement is expected to rise, driving the feed and vitamin demand to improve gradually. Among the many subdivided varieties, VA supply and demand are expected to rise Keep a tight balance, and the ve pattern is expected to be optimized in depth. Related companies include XinHeCheng, Zhejiang medicine and St Guanfu. Pesticides and intermediates: the demand side is old and new, and the demand side of the supply side is expected to see a second growth due to the improvement of drug resistance. The supply side is expected to continue to improve the industry concentration due to the tightening of domestic safety and environmental protection supervision. The head companies with capacity under construction are scarce, and new capacity is expected to be effectively converted into income and profit In addition, if the price of agricultural products stabilizes and rebounds, it is expected to drive the demand for pesticide products to rise and the price of products to rise, and relevant companies will promote agricultural chemical industry, Guangxin, Changqing, etc. Emerging fields: import substitution logic still exists, semiconductor, carbon fiber and other related chemicals demand keeps growing, and import substitution logic is still sustainable; electronic communication materials, tail gas purification materials, new energy chemicals, etc. benefit from policy promotion and the release of downstream demand, and are expected to step into a rapid growth stage, focusing on the recommendation of blonde Technology (TLCP materials Materials, degradable plastics, Guangwei composite (carbon fiber), national porcelain materials (electronic chemicals, tail gas purification materials), Yongtai Technology (new energy chemicals), etc.