Outlook for energy and materials in 2020

The new materials are brilliant, the new model is changing.

Review in 2019: the recession shows the leader's quality, the segmentation champion's performance is brilliant. 

The great waves in 2019 show the hero's value. The decline of the prosperity of the chemical industry itself and the performance of the high-quality leading enterprises are the most simplified industry map of the chemical industry in 2019. In terms of further refinement, the bulk chemical industry can be called "night and moon", while the fine chemical industry can be described as "unique". Due to the uncertainty of the foreign trade environment and the sluggish demand caused by the accompanying industry de stocking, the release of the additional capacity invested and constructed under the prosperous and high prospect, resulting in the oversupply of supply becoming the main trend of the chemical industry in 2019, so the price of chemical products is generally down. On December 19, 2019, China's chemical price index (CCPI) was 4318, compared with 4808 in the same period last year, with a year-on-year decrease of more than 10%. The decline of upstream bulk chemicals is particularly obvious, for example, MDI is down by more than 20%, polyester is down by about 19%, methanol is down by more than 15%, price drop becomes the main trend of chemicals in 2019, and also becomes the main factor that drags down the profitability of relevant enterprises.

However, the high-quality industry leader still maintains a high level of profitability while the price of products falls sharply, presenting "night" Black moon "trend. For example, Wanhua chemical still achieved a net profit of 7.89 billion in the first three quarters of 19 years, a decrease of 12% compared with the same period of last year. Tongkun Co., Ltd. still achieved a net profit of 2.45 billion in the first three quarters of 19 years, a slight decrease of 2% compared with the same period of last year, while Hengli Petrochemical Co., Ltd. benefited from the production of large-scale refining and chemical projects, and realized a net profit of 6.81 billion in the first three quarters, even larger than the same period of last year An increase of 86%. The high-quality company shows the profitability beyond the industry or even beyond the cycle when the product price drops sharply, which fully shows the high-quality value connotation of the relevant leading enterprises. At the same time, the segmentation champions of some sub industries show an exciting development momentum, not only completely unaffected by the macroeconomic downturn, but also because of their own strength to enjoy the dividend of the improvement of the industry pattern, the product price gap and market share increase at the same time, showing a hot situation of "volume and price rising together", which can be called "another hole". For example, China's advanced concrete material leader, subote, benefited from the introduction of its new building materials and the permanent withdrawal of small and medium-sized enterprises in the water reducing agent industry.

In the first three quarters of 19 years, the non net profit increased by 140%, and the business performance achieved a year-on-year and high growth at the same time. For another example, the leading producer of modified plastics, blonde technology, has a significant advantage in the industry. Although the price of raw materials has declined, the product price gap has significantly expanded, and there are LCP high-end products applied to emerging industries such as 5g. In the first three quarters, non net profit has been deducted by 940 million, up 87% year on year. In addition, there are more than ten sub champions, such as Industrial Bactericide (Bayao chemical), cellulose ether (Shandong Heda), plastic additive (Nikko chemical), etc., which achieved a growth rate of more than 100% in the first three quarters. These "Xanadu" like segmentation industry champions, which can reflect the super anti risk ability, all have strong technical barriers, channel barriers or brand advantages.

Resumption of chemical industry in 2019: the mood cycle has turned upside down, and the intrinsic value of the leading industry in 2019 (data as of December 20, 2019) Shanghai Shenzhen 300 index rose by 33.43%, authorized heavy stock PetroChina fell by 17%, and under the double impact of macroeconomic downward pressure on the price of chemicals, the chemical sector rose by only 19.76%, significantly losing the index, ranking in Shenyin The 17th in 28 first-class industries of the world. However, it is worth noting that the market value and valuation level of the chemical industry's top quality leaders have been significantly improved in 2019.

For example, although Wanhua chemical's performance has a certain year-on-year decline, its market value has nearly doubled compared with the beginning of the year, which fully shows that mainstream investors have paid more attention to the intrinsic value of the leading company than the short-term performance fluctuation, and the market style is more mature. Throughout the year, the chemical industry sector experienced ups and downs in market sentiment. In the first quarter of the 19th year, thanks to the expected strengthening of the counter cyclical adjustment of macro policies and the expectation of bottoming caused by the short-term supply and demand balance restoration brought by the replenishment of inventory cycle after the Spring Festival, the chemical industry sector ushered in a rapid rise in the plate market. The "321" special major safety accident in Jiangsu Province triggered a strong expectation of the chemical industry for the supply side reform of version 2.0 based on safety remediation, and the market sentiment further increased sharply. But soon, with the change of external macro environment leading to the worry about demand, the market sentiment of chemical industry quickly fell to the freezing point.

Although the market mood fluctuates violently, the business performance of the enterprise and the discount of the enterprise value behind it are always the fundamental factors that influence the market value of the whole plate. In terms of sub sectors, the products and materials industry in the middle and lower reaches of the chemical industry is significantly better than the petrochemical and raw materials industry in the upper reaches, which is mainly due to the fact that the lower pressure of the macro-economy on the upper reaches is greater and the performance pressure is more obvious. Petrochemical / chemical raw materials / chemicals / chemical fiber / plastics / rubber rose - 2.07% / 14.85% / 25.05% / 27.55% / 37.57% / 29.93% respectively in the six sub sectors of the chemical industry. (plastic plate data is the data excluding * ST Kant.) This differentiation is in line with our expectations at the end of last year.

Industry outlook in 2020: new materials are brilliant and new models are changing. In 2020, it is suggested that the chemical industry should focus on the booming new material plate and the gradually approaching new model plate. New materials are the cornerstone of advanced manufacturing and other high-tech industries, while the growth of terminal demand is the fundamental driving force to drive new materials from chemical laboratory to industrial production. The development trend of the downstream industry is the core factor affecting the new material industry.

At present, no matter in the formed high-tech industries such as semiconductor manufacturing or emerging high-tech industries such as 5g, China has shown significant advantages in the incremental market, bringing significant development opportunities for the development of new materials. In addition to the development opportunities brought by the product itself, the new business opportunities brought by the new model and the promotion of its internal value for the relevant companies also create new investment opportunities, and the new business model has opened a broad space for the further development of the relevant companies. The emergence and development of the new mode, whose essence is often the further specialization of the industrial chain, is an inevitable trend in line with the business logic, which also makes the industry ceiling of the relevant enterprises greatly increased, and provides a practical realization channel for their technical capabilities, significantly increasing the value of enterprises, bringing new development opportunities.

Investment opportunities in subdivision 

new materials sector: it is recommended that China's new materials industry, the champion of subdivision with high cost performance and first mover advantage in the global perspective, can be divided into two categories. The first category is that China has broken through barriers such as technology monopoly, thus realizing the import of alternative materials. The second category is the original innovative materials, which are mainly brought about by new applications With the need for special synthetic materials. The first category of imported alternative new materials mainly includes electronic chemicals (photoresist, etc.), special polyester materials (high-performance multicomponent copolymers), etc. its application has been relatively clear, and it has a formed industrial chain system, but its disadvantage is profitability or downward pressure. The second category of original innovative materials mainly includes special fiber materials (high-performance carbon fiber, etc.), special communication equipment materials (5g, etc.), special building materials (anti cracking additives, etc.), etc., which have a broader development space and stronger profitability, but now the absolute revenue volume is smaller and the risk of the industrial chain is higher. At present, China's new material industry is dominated by the first category of imported substitute new materials, in which we recommend the segmentation champions with high cost performance in the global perspective, such as electronic chemical materials (Haohua technology, guoci materials, Wanrun Co., Ltd., FeiKai materials, Jingrui Co., Ltd., Juhua Co., Ltd., nandaguangda, etc.). In addition, some new material enterprises with original innovation have emerged. In this kind of industry, we recommend leading enterprises with first mover advantage in the global perspective, such as subote, Kingfa technology, Wanhua chemical, Huafeng spandex, etc. The growth of terminal demand is the fundamental driving force to drive new materials from chemical laboratory to industrial production, so the development trend of downstream industry is the core factor affecting new materials industry. The prelude of the transfer of the downstream high-tech industries such as semiconductor manufacturing industry to the mainland of China has begun. The localization supporting industry has a strong advantage of rapid interaction and iterative upgrading with customers, and can reduce costs and increase efficiency, which provides a major development opportunity for the first category of imported alternative new materials. At the same time, due to the enhancement of China's comprehensive strength and the release of engineer's bonus, emerging industries such as 5g industry, emerging models such as sharing economy, and world-class projects such as Hong Kong Zhuhai Macao Bridge, which have been in the leading position in the world, bring unprecedented development space for the second type of original innovative new materials. 3.2 new mode section: in addition to the development opportunities brought by the traditional manufacturing "turning the stone into gold", the new business opportunities brought by the new mode and the promotion of its internal value for the relevant companies also create new investment opportunities. For example, the following three new business models have opened up broad space for further development of related companies.

(1) "Net red with goods" brings the demand for the processing mode of the daily chemical industry: "net red" strong "with goods" ability makes the relevant companies deeply realize that the consumption attribute of daily chemical products is far greater than the influence of product attribute, so focusing on the sales link and further subcontracting the production link, thus realizing the mode of light assets and fast cycle becomes the development trend of the daily chemical industry As a result, the leading enterprises that have previously focused on daily chemical raw materials, such as surfactants, are expected to further extend to the downstream end products, such as detergents, to undertake the downstream OEM demand, to extend the industrial chain, to play the ability of industrial management and operation, and to create incremental value. Recommended surfactant bibcock Zanyu technology.

(2) Development opportunities brought by outsourcing and cooperation in R & D of pharmaceutical and pesticide Giants: with the increasing difficulty in R & D of pharmaceutical and pesticide giants, as well as the demand for cost control and efficiency improvement, their internal motivation for outsourcing and cooperation in R & D is becoming stronger, and the business model of pharmaceutical intermediate manufacturing enterprises has also started from CMO (customized processing) to Due to the transformation of cdmo (customized development and processing), the leading companies in chemical synthesis have unique advantages in the process development of synthesis with specific molecular structure due to their focus on chemical synthesis, and their development space is greatly expanded. It is recommended that the experts of chemical synthesis combine chemical technology.

(3) From "product provider" to "solution provider": in industries such as additives, the mode that additive manufacturers provide "solutions" rather than specific products is gradually developing. The additives used in the end are often different from each other