Higher barriers to dyestuff industry have now formed an oligarchy competition pattern.
A large number of small and medium-sized chemical enterprises that do not meet the requirements of environmental protection will withdraw from the market, and their market share will be centralized to leading enterprises, especially listed companies. After more than three years of market-oriented capacity removal, supply and demand in some chemical industry segments have entered a balanced range. Enterprises that expand capacity counter-cyclically from 2013 to 2017 will experience performance release in 2018.
Recently, the Institute has focused on the chemical industry. Among them, pesticides, dyestuffs and other sub-industries obviously benefit from the contraction of supply under the restraint of environmental protection, and the high prosperity of the industry is expected to continue.
Heng Qiang, the strong pesticide
In the first quarter of 2018, the operating income of the pesticide sector reached 27.8 billion yuan, an increase of 25.9% over the same period last year; net profit was 4.24 billion yuan, an increase of 147.9% over the same period last year; and the gross product interest rate continued to rise to 29.3%. Most of the pesticide companies have shown supermarket expectations.
According to the industry classification of Shenwan, 12 pesticide listed companies have announced their first half performance forecast. Apart from Huifeng shares and Lianhua Technologies, the remaining 10 companies are expected. This shows that the industry as a whole is still in a high boom range. Among them, Nopson's profit scale ranks first. The company expects net profit of 2816.67 million yuan to 328.612 million yuan in the first half of the year, an increase of 20% to 40% over the same period of last year. Yangnong Chemical Co., Ltd. is currently the fastest growing company. The company expects net profit to increase by 80% to 130% in the first half of the year over the same period of last year.
A senior executive of a pesticide listed company told China Securities News that from the perspective of cost, supply and demand, supply contraction under strict environmental constraints has become the main driving factor for the high prosperity of the industry. At present, the main producing areas of pesticides, such as Jiangsu, are affected by strict environmental protection policies, and the supply contraction is obvious, which makes the price of raw drug products continue to rise. With the upgrading of the park and supporting facilities, the industry is undergoing a round of shuffling. In the future, market share will be centralized to more standardized leading enterprises, especially listed companies. The market prospects of leading enterprises in the medium and long term are optimistic.
Reporters learned that after the exposure of pollution problems in chemical plants in Lianyungang District, Jiangsu Province, the current start-up rate of Guannan, Guanyun and Binhai Park is very low, resulting in a variety of raw drug products supply shortage. The low start-up rate of Yanwei Port, Chen Jiagang, Duigou Port and Binhai Park has resulted in the shortage of intermediate supply for pesticide production enterprises. Data show that in March 2018, pesticide production fell 11.5% year on year. Under this background, the bargaining power of leading enterprises is constantly improving.
Cheng Lei, a securities analyst in the new era, believes that the treatment of wastewater pollution in fine chemical industries such as pesticides and dyes is very difficult and will be greatly affected by environmental impact in the future. Shandong, Jiangsu and other major industrial provinces have tightened environmental protection supervision. In the short term, it will have a greater impact on the industry, and the supply of chemical products may be tight at different stages.
Executives of the listed companies said that the recent rise in international oil prices, the cost side will increase, superimpose downstream demand, promote product prices.
Lier Chemicals recently announced that its exchange earnings have increased due to the devaluation of the RMB against the US dollar. The company raised its net profit forecast for the first half of the year.