Petrochemical industry: 18 PVC boom is expected to further improve

- Jan 26, 2018-

Oriental Securities January 25 released the Petrochemical industry research report, summarized as follows:

Report cause

PVC industry has been over the inflection point of supply and demand, we judged the prosperity of 18 is expected to further enhance the specific logic as follows:

Core point of view

18 New supply Less: According to statistics, the domestic industry started to reach nearly 80%, in recent years, high. The stock capacity has more than 50% put into production more than 5 years, and the past few years the industry profit is very poor, the enterprise to the equipment maintenance is insufficient, causes the actual production difficulty to reach the theoretical capacity. Although the planned new capacity in 18 nearly 2 million tons, but most of the high cost of the procurement of calcium carbide method, production time is also concentrated in the second half, the impact of production is small, the impact on the price is also very little, and may even pull higher marginal costs. We therefore expect that the 18 increase in PVC supply will not exceed 2.5%.

Demand to maintain growth: 17 real estate Enterprises in the land acquisition area significantly increased, and the state regulations over two years did not start development, the government can reclaim land use rights. At present, domestic commercial housing inventory also declined more, we expect 18 new construction area will be 3% growth, which will be synchronized to pull the demand for PVC real estate. The demand for PVC products is strongly correlated with GDP, and we expect to keep about 4% growth in the future. And the export performance of PVC products most prominent, especially PVC flooring, the export growth rate in the past two years in more than 25%. Therefore, we expect 18 overall demand for PVC growth in the 6%.

Anti-dumping impact is limited: China's anti-dumping against South Korea, the United States, Japan, Russia and Taiwan will expire this year, and we anticipate that there is little likelihood of continued anti-dumping. At present, China's main three sources of PVC imports are the United States, Japan and Taiwan, the total accounted for more than 90% of China's imports, and three countries and regions of the PVC operating rate has reached about 90%, further upgrade the space is very small. and overseas as a result of economic recovery, real estate rebound, demand is also growing, so even if anti-dumping cancellation, we expect import growth is very small.

Investment proposals and investment targets

Domestic PVC Listed Companies many companies, we think the most competitive enterprises concentrated in the raw materials and energy costs in the northwest, the proposed focus on the listed companies in Hong da Xingye (002002, overweight), June group (601216, not rated), The two per million market value of PVC production capacity of 0.34 tons and 0.18 tons, PVC each up to 1000 yuan EPS elasticity corresponding to 0.18 yuan and 0.06 yuan (assuming the cost unchanged, income tax rate of 25%).