国海证券:化工行业盈利底部已经确认 维持行业“推荐”评级

Guohai Securities: The bottom profit of the chemical industry has been confirmed to maintain the industry's “recommended” rating

Zhitong Finance ·  09/20/2023 15:56

The Zhitong Finance App learned that Guohai Securities released a research report stating that taking into account the steady recovery in profits in the chemical industry and the gradual improvement in inventory turnover, while the industry's production capacity continues to expand, the “recommended” rating for the chemical industry is maintained. Looking at the industry segment in the 2023 semi-annual report, the bottom profit of the chemical industry has been confirmed, and it has bottomed out and rebounded. As of the end of June, production capacity was still continuing to expand. The bank determined that the chemical industry was at the bottom of the production capacity cycle. From the perspective of capacity expansion, industries such as printing and dyeing chemicals, food and feed additives, adhesives, and polyester have had little capacity expansion and low profit positions, which is worth paying attention to.

The main views of Guohai Securities are as follows:

Profitability aspects of the industryBeginning in the first half of 2020, global demand gradually picked up, compounded by the impact on overseas supply chains, and a rapid rise in profits in the domestic chemical industry. In 2022, the overseas industrial chain was repaired, domestic demand was weak, and the profit of the domestic chemical industry declined in the second half of 2022. With the gradual decline in energy prices and the steady recovery of domestic demand, the profitability of the domestic chemical industry steadily rebounded in the first half of 2023. Looking at industry segments, ROE in industry segments such as refining, viscose, chlor-alkali, printing and dyeing chemicals, nitrogen fertilizer, compound fertilizer, carbon fiber, and titanium dioxide has fallen back to a low level.

In terms of capacity constructionIn 2020, due to the impact of the epidemic, investment in the chemical industry slowed down. Entering 2021, the domestic chemical boom has risen sharply, which has also led to a rapid recovery in industry investment. Since the first quarter of 2021, the proportion of projects under construction/fixed assets in the basic chemical industry has continued to rise. As of June 2023, the domestic basic chemical industry's engineering/fixed assets under construction/fixed assets have increased to 38%, maintaining bucking the trend. Looking at industry segments, industry segments such as petroleum extraction, oilfield services, potash fertilizer, adhesives, explosives supplies, printing and dyeing chemicals, food and feed additives, and polyester have expanded little.

In terms of inventory turnoverSince the second half of 2022, domestic demand has been weak. Combined with overpurchases from overseas customers during the pandemic, industry inventories are high, and the basic chemical inventory turnover rate has continued to decline, reaching a phased low level in 2023Q1 (since Q2 2020). 2023Q2, the removal of industry inventories, compounded by improvements in downstream demand, and the basic chemical inventory turnover rate has rebounded slightly, but it is still at a historically low level. Looking at industry segments, such as viscose, spandex, explosives supplies, oil extraction, and oilfield services, etc., have high inventory turnover rates.

In terms of price differencesIn the context of falling energy prices and a recovery in domestic demand, the price gap in the chemical industry has gradually recovered. Compared with the low in 2022, as of the end of August, the Guohai Chemical Price Spread Index according to the bank's statistics had recovered to the historical 16% level. Looking at product segments, the price difference for PE, compound fertilizer, spandex, polyester, nylon, PVC, silicone, epoxy resin, etc. is at the bottom of history.

Risk warning:Prices of raw materials fluctuated and changed; environmental protection became stricter; product prices fluctuated greatly; project construction fell short of expectations; and competition in the industry intensified.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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