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2017's strategy of basic chemical industry: wind water turns to withered trees in turn and wai

Time:2018-03-27 Clicks:

The profit growth of chemical industry is good, and the valuation is on the high side.

From the perspective of industry situation, China's chemical raw materials and products revenue has bid farewell to the high-speed growth stage and entered the low-speed growth stage. Thanks to the increase of gross profit rate due to the decline of oil price, the profitability has increased compared with the previous period.

Specifically for listed companies, taking 212 basic chemical companies as samples, the operating revenue of q1-q3 in 2016 was 60.6838 billion yuan, up 4.50% year-on-year, and the net profit attributable to listed companies was 27.008 billion yuan, up 5.93% year-on-year. The index of 29 sub industries of CITIC only rose in the three industries of food and beverage, coal and home appliances. In terms of valuation, the average price earnings ratio (TTM, excluding negative value) of the basic chemical industry is 43.26 times, while the average PE of the basic chemical industry in the past decade is 31.30 times, which is currently on the high side. Among the 29 sub industry indexes of CITIC, the basic chemical industry fell 8.97%, ranking 11th.

Wind and water turn in turn, withered trees wait for spring

As a traditional industry, chemical industry contains various positive risks and opportunities on the surface. Environmental protection supervision has been a major blow, and chemical enterprises must take a green and sustainable road; overcapacity is still a serious problem, but what needs to be more vigilant is the deterioration of demand; raw material route and process change promote the industry to reshuffle, new material technology innovation brings surprises, and the investment opportunities contained therein are also worth looking forward to; the chemical industry deeply participates in globalization, and needs to be vigilant about the factor cost weakening the industry competitiveness.

Stock selection strategy of chemical industry in 2017

Looking forward to 2017, we believe that we should look for investment opportunities from the following aspects: 1) low oil price, and lay out sub industries with stable demand. 2) advance the layout of "one belt and one road" to catch the target of harvest. 3) it is only when the pesticide recovers that the sharp angle is revealed, and the strong variety of structure is closely followed. 4) focus on the advantageous fields and make intensive efforts to build the industry leader. 5) the low price brings about the recovery of the industry after the rapid clearing of production capacity.

Key listed companies

The strategy of stock picking is to explore from the opportunities of the basic chemical industry, and comb out the following sub sectors and targets according to the prosperity level of the terminal industry: Pesticide structural strong varieties, focus on the advantages of the field, build the leading industry and advance the layout of "one way and one road" to meet the target of acceptance, and recommend 002258.SZ, 600141.SH, 000703.SZ and sword stock (002361 .SZ).

Risk tip 1) the risk of weak macro-economy leading to sluggish downstream demand and general decline in chemical prices. 2) the risk of large fluctuation of crude oil and other bulk raw materials prices.

Key:2017's strategy of basic chemical industry: wind water turns to withered trees in turn and wai