Development requirements of chemical industry

Valuation methods for chemical industry can be selected: P/ E valuation method, PEG valuation method, price-to-book valuation method, price-to-cash ratio valuation method, P/S price-to-sales valuation method, EV/Sales valuation method, RNAV revaluation net asset valuation method, EV/EBITDA valuation method, DDM valuation method, DCF discounted cash flow valuation method, NAV net asset value valuation method, etc.

Industry development and driving mechanism and risk management

China Petroleum and Chemical Industry Federation released the 2019 China Petroleum and Chemical Industry Economic Operation Report, showing that China has become a major oil and chemical country in the world, accounting for 40% of the global market share. The petroleum and petrochemical industry can be divided into three major sectors: oil and gas exploration and development production, petroleum refining and oil product sales, and petrochemical product production and sales. The existing and operating enterprises in China's petrochemical industry are mainly concentrated in the first echelon of Shandong (286,800) and Jiangsu (250,000), accounting for 6.45% of the 31 provinces, regions and municipalities in the country; The second echelon, with more than 100,000 enterprises but less than 200,000, is represented by 7 provinces and municipalities, including Guangdong, Shaanxi, Anhui and Hubei, accounting for 22.58%. Last is the third echelon, the number of enterprises under 100,000 to Shanghai, Zhejiang, Jiangxi, Fujian and other 22 provinces, regions and municipalities, accounting for 70.97%.

From the perspective of industrial income structure, the petroleum and chemical industry can be divided into chemical industry, refining industry and oil and gas extraction industry. In 2019, the operating income of China's petroleum and chemical industry was 12.27 trillion yuan, an increase of 1.3% year-on-year, among which, the operating income of the chemical industry was 6.89 trillion yuan, a decrease of 0.9% year-on-year, and the operating income of the refining industry was 4.02 trillion yuan, an increase of 4.6%, a growth rate of 1.6 percentage points; The operating income of the oil and natural gas extraction industry was 1.10 trillion yuan, up by 2.4 percent or 0.6 percentage points. China's petroleum and chemical industry is still dominated by the chemical industry and refining industry, with the proportion of the two reaching 89.55% in the first half of 2020.

Industry development and drivers

Industry risk analysis and risk management

(1) Frequent occurrence of safety problems; According to the "Hazardous Chemicals Catalogue" jointly issued by the Ministry of Industry and Information Technology and the Ministry of Public Security, basic organic chemicals are listed here, with toxic, corrosive, explosive, combustion, combustion and other properties, can cause great harm to the human body, facilities and the environment. In August 2014, the National People's Congress amended the Production Safety Law of the People's Republic of China, specifically pointing out that units engaged in the production, operation and transportation of dangerous goods should be specially equipped with production safety management personnel to ensure the safety of personnel and property throughout the production process.

(2) Price fluctuation of raw materials; The basic organic chemical industry takes coal, oil and natural gas as the main raw materials, and its price determines the economic benefits of the production and operation of the enterprise. When mineral energy prices rise, the price rise of basic organic chemical products generally lags behind the 16 report No. [19RI0460] market, and the corresponding production enterprises have cost disadvantages, and the profits of enterprises will decrease accordingly. On the contrary, when mineral energy prices are low, organic chemical enterprises need to speed up the production and sales process to avoid the risk of inventory impairment. Therefore, the basic organic chemical industry is more affected by cyclical fluctuations in raw material prices.

(3) Environmental protection issues have received much attention; In the process of production and operation of basic organic chemical enterprises, a lot of harmful substances such as waste gas, waste water and solid waste are usually produced. If such harmful substances are not restricted and discharged at will, they will pollute the atmosphere, rivers and land, leading to serious environmental problems.

3.3 Competition Analysis

Chemical industry competition From a worldwide perspective, the fine chemical industry has formed a monopoly competition pattern represented by Bayer and BASF in Germany and DuPont and Dow Chemical in the United States. In recent years, foreign companies such as Bayer and DuPont are actively integrating related industries and have acquired fine chemical industries such as pharmaceuticals, pesticides and polymers. Dupont, Dow Chemical, Bayer, BASF, ExxonMobil, Shell, Evonik Industries and other foreign companies have invested in the field of fine chemical industry in China. Such enterprises are mainly located in the middle and downstream of the industry in China, while the company is in the upstream link of the industrial chain, and tends to the production and sales of chemical intermediates. At present, the number of domestic enterprises producing aromatic ketones is medium, most enterprises produce small scale, and most can only produce part of the product series of aromatic ketones, such enterprises have a single product line and poor product quality stability; The concentration of fine chemical industry in China is low, many enterprises are scattered, and the production is mainly small and medium-sized private enterprises.