Understand the investment opportunities of the cycle industry

Looking forward to 2022, under the influence of policies, institutions are optimistic about major infrastructure sectors such as construction, building materials and real estate, as well as transformational enterprises such as electricity and coal.

Standing at the beginning of 2022 is a good time to look forward to investment opportunities for the whole year. From the plate dimension, what are the investment opportunities for this year's cycle stocks? In this regard, Sha Wei, a fund manager at Boshi, expressed his latest views in a live broadcast.

Sha Wei said that because of the revision of economic policy, the hub of commodity prices will move down. Commodity prices have risen a lot in 2021, and PPI is very high. Mainly because supply-side restrictions are very large, supply-side restrictions in 2022, because policy changes are bound to be reduced. In the general direction, the hub of commodity prices will move down, PPI will move down, and the profits of industrial enterprises will tilt to the middle and lower reaches. Downstream enterprises gradually normalize production, so as to strengthen economic vitality and growth potential.

In this context, Sha Wei pointed out that in the cycle plate, there are the following investment opportunities.

Firstly,steady growth on the investment side will be a very important thread for the whole year.Under the economic pressure this year, the policy will certainly put forward a lot of measures conducive to economic growth, for example, the government will speed up local debt, create more major projects, and so on. ImageConstruction, building materials, real estate and other large infrastructure investment sectors will have phased investment opportunities.

Second,The new renewable energy and raw material energyis not included in the control of total energy consumption, and the two industries directly related to the impact are the chemical and petrochemical industries. Many enterprises in these two industries have some projects. In the context of carbon neutrality last year, these project departments were either not allowed or postponed.In this year's policy environment, their projects will be much more likely to be approved, the corresponding growth will also be highlighted, and there will be certain investment opportunities.

Third,an industry with long-term hard constraints on the supply side and long-term room for growth in demand.Although some projects or industries will be encouraged because of the needs of economic development or because they do not have such large carbon emissions. There are also many industries that are strict and even have the ceiling of production capacity.

Typical is electrolytic aluminum, with a production capacity limit of more than 40 million, which can no longer be increased. In addition, oil refining capacity, that is, 1 billion tons in China, cannot be increased any more.The downstream of these industries themselves is a situation of steady growth.With the passage of time, the supply side is strictly restricted, and the demand side is still growing steadily. The operating rate still has to go up, and the profits will become better and better, and these industries will have better investment opportunities in the medium term.

Fourthly,enterprises that transform clean energy operations and have strong project acquisition capabilities.Since the second half of last year, traditional thermal power stocks have been highly sought after by the market.Although the profits of these thermal power stocks are not very good, their cash flow is very good, and they all have a lot of resources for clean energy projects, which will turn the cash flow or profits of thermal power to clean energy, such as wind power, photovoltaic, etc., in the long run, if they find a new long-term development direction, new business space. The market capitalization should also be gradually increased over a long period of time.

In addition to thermal power, there are many coal enterprises or some other traditional industries also have similar opportunities. For example, coal enterprises have relatively good profitability and good cash flow, and many enterprises also belong to large central enterprises or state-owned enterprises, have certain project acquisition capabilities, and can also find new development space under the background of large energy cleanliness. These enterprises are also worthy of attention.

To sum up, there are four types of investment opportunities in the 2022 cycle sector: first, opportunities based on changes in hydropower policy, such as stable growth, construction, building materials, real estate and other major infrastructure investment sectors. Second, the chemical and petrochemical industries caused by policy changes. As more new projects are approved in these industries, the growth of their stocks will be highlighted. Third, the supply and demand of their own industryare constantly improving electrolytic aluminum and refining and chemical industry. Fourth, enterprises with the ability to transform, mainly concentrated in the power and coal industries.