① Recently, the chemical sector is gaining popularity, and related individual stocks have risen on a large scale. ② China's chemical product price index hit the bottom of the current round at 4,543 points on January 11. ③ CITIC Securities has summarized the types of chemicals that have achieved excessive increases in price compared to costs since 2024Q1, including refrigerants, TMA, viscose filaments, nitrochlorobenzene, maltol, vitamins, MMA, etc.
Financial Services Association News (Editor Zhai Zhehao). Recently, the chemical sector is gaining popularity, and related individual stocks have risen on a large scale. Among them, Zhengdan shares surged more than 200% in 10 trading days; the tire industry continued to rise, leading Sailun Tire recently hit a record high; refrigerant leader Juhua Co., Ltd. hit an intraday rise and fall on Friday, with an increase of more than 40% during the year. In addition, the concept of titanium dioxide, which has raised product prices across the industry several times, has also begun to be explored in the market, and Lubei Chemical won 2 consecutive wins.
The bottom of domestic chemical prices may have appeared
China's chemical product price index hit the bottom of the current round of 4,543 points on January 11. Driven by international oil prices in February, the chemical product price index fluctuated and rebounded from February 6 to now. The high point during the year was 4,703 points on April 22. Among them, the most important chemical products with the highest increase include sulfuric acid (98%), which increased 29.5% during the year; petroleum benzene (industrial grade), which increased 20.9% during the year; and styrene (grade 1), which increased 13.8% during the year. The price of polyvinyl chloride (SG5) alone closed down during the year, with a decrease of 3.1%.
Guosheng Securities analysts Yang Yitao and Wang Xixin pointed out that at present, the chemical production expansion sentiment has declined markedly, and the sector's profitability may have bottomed out. The current cycle can be compared to 2012 to 2014 — also against the backdrop of low growth in demand, supply is still being released at an accelerated pace, and it has yet to turn its head. There is a transmission cycle of about one and a half years from construction projects to fixed assets. After the fixed asset growth rate enters a downward channel (indicating that the release of production capacity has come to an end), profits in the chemical sector are expected to usher in a new round of upward trend worth looking forward to, and the chemical sector will break the dawn.
Judging from the valuation situation, as of April 16, the basic chemical industry index (CITIC) was 4717.3 and PE (TTM) reached 25.5, which is in the 34% position in the past 10 years; as of 2023Q4, the basic chemical sector average net interest rate (TTM) and ROE (TTM) were 6.2% and 7.2%, respectively, at the 15% level for the past three years. At present, the basic chemical industry as a whole is at the bottom of both valuation and profit.
Middle Eastern tycoons focus on buying A-share chemicals
On the evening of April 22, energy giant Saudi Aramco announced that it had discussed with Hengli Group a potential acquisition of 10% of Hengli Petrochemical's shares and signed a memorandum of understanding on the proposed deal. Based on the current stock price, the total market value of Hengli Petrochemical exceeds 100 billion yuan, and the Middle Eastern tycoon will make another “10 billion luxury purchase” in the A-share market.
In March of last year, Saudi Aramco announced the acquisition of 10% of Rongsheng Petrochemical's shares at a price of 24.3 yuan per share, with a total transaction premium of 24.6 billion yuan reaching 88%.
Saudi Aramco President Amin Nasser delivered a speech at the 2024 China Development High-Level Forum. He said that chemicals bear the brunt of the five key areas of investment cooperation with China. China already accounts for 40% of global chemical sales, and Saudi Aramco has a majority stake in the world's leading chemical company, Saudi Basic Industries (SABIC), and has the world's top chemical strength. This will help Saudi Arabia achieve the goal of converting 4 million barrels of crude oil into chemicals per day by 2030.
Agencies suggest paying attention to chemical varieties that have increased prices
Since 2024, prices of some chemical products have risen rapidly. With the disclosure of the first quarterly report, product price increases have been reflected in performance: Lubei Chemical's net profit for the first quarter was 505.414 million yuan, up 3131.39% year on year; Xinfengming's net profit for the first quarter was 275 million yuan, up 45.25% year on year; Jinshi Resources's net profit for the first quarter was 605.356 million yuan, up 74.94% year on year.
In response, CITIC Securities has summarized chemical varieties that have achieved excessive growth in price compared to costs since 2024Q1, including refrigerants (production quota+demand improvement, YTD+60-75%), viscose filament (no new production capacity+strong demand in the short term, YTD +2.4%), TMA (shutdown of major overseas manufacturers, YTD +66.7%), vitamins (industry maintenance, YTD+10-20%), nitrochlorobenzene (no additional production capacity+pattern concentration in the short term, YTD+5~ 45%), MMA (Industry maintenance, YTD +16.8%), maltol ( YTD+30~ 60%) etc. According to the Financial Services Association, the specific situation of the companies involved in the above chemicals is as follows:
