Fine chemicals: Focus on the uptrend of the sector and subdivision industry leaders

Xinhecheng: Based on technological innovation, to create a diversified integrated fine chemical industry leader

VA stopped falling, VE inventory to accelerate the price at the bottom, and continue to be bullish in the later period. Vitamin downstream feed production marginal improvement, downstream demand gradually improved, and the industry supply side contraction logic has always existed, BASF VA device will maintain a low starting load before stopping production next year, the current industry inventory is low, supply is tight, with the improvement of downstream demand VA prices in the late bullish; Can special technology and DSM joint venture VE production plant production to the third quarter of next year, superposition between cresol supply shortage, industry supply significantly reduced, inventory to accelerate, optimistic VE prices continue to rise, the current VE offer 58,000 yuan/ton, the transaction price has risen from 42,000 yuan to 50,000 yuan/ton, European prices have also begun to rise, VE will be the most flexible variety of Xinhe Cheng's performance next year.

Profit forecast and valuation: It is estimated that the company's net profit from 2019 to 2021 will be 27.84, 35.73 and 4.747 billion yuan respectively, and the current stock price corresponds to 17.3/13.4/10.1 times of PE.

Zhejiang Medicine: The breakthrough of innovative drugs is imminent, and the vitamin business is flexible

Vitamin business continues to improve in the future: the company has VA production capacity of 5,000 tons, VE powder production capacity of 40,000 tons, BASF VA due to the condensing tower accident is in a state of production, will maintain a low starting load before production next year, the current industry inventory is low, supply is tight, with the improvement of downstream demand VA prices late rise; Nengte technology and DSM joint venture VE production plant production to the third quarter of next year, superposition between cresol supply shortage, industry supply significantly reduced, inventory to accelerate, VE prices will enter the upward channel in the future. Transform innovative drugs and actively distribute ADC drugs: In 2017, the company established Zhejiang Xincode Biology, an innovative ADC drug platform company, to cooperate with AMBRX, an American company, actively layout ADC drugs, and obtained the regional rights and interests of anti-HER2-ADC (ARX788) and anti-CD70-ADC (ARX305) in China, among which ARX788 has excellent clinical phase I data. Could be a blockbuster drug. In addition, as a new generation of fluoroquinolone free drugs, the market space is expected to reach 1 billion yuan, capsules have been included in medical insurance, injection is expected to be approved in the first half of next year, and it is expected to be rapidly released in the later period.

Jindawei: Coenzyme Q10 price increase is expected to be strong, and the future profit elasticity is large

The company's vitamin business includes VA and coenzyme Q10, the current supply of coenzyme Q10 industry is mainly concentrated in Jindawei, Shenzhou Biological and Xinhe Cheng three, due to environmental supervision, about 30% of the production capacity of Coenzyme Q10 industry has been shut down, currently Shenzhou Biological will increase the price of coenzyme Q10 to 550 US dollars/kg, about 4,500 yuan/kg. The actual transaction price of the US market is 450 US dollars/kg, the previous price was 170 US dollars/kg, because coenzyme Q10 is currently highly concentrated in the industry, and there are no new entrants, it is expected that the price of the product is expected to continue to rise in the future, while VA is expected to continue to reduce the supply of the industry due to the imminent shutdown of BASF, and the price is expected to continue to rise; In addition, the company actively layout the whole industry chain of health care products, especially in the field of functional drinks, is a new profit growth point for the company, recommend attention.

2 Industrial fungicide

Baiao Chemical: The supply of fungicides and intermediates continues to be limited, and the company's performance has entered the explosive period

Industrial fungicides have a broad market, and environmental protection is increasingly driving market demand: Global industrial fungicide market size of 40 billion yuan, the industry growth rate of about 3-5%, domestic about 12 billion yuan, the growth rate of about 10%, is the world's second largest market, accounting for about 30% of the market share, downstream 42% market for industrial water treatment, with the implementation of environmental taxes and sewage permits, industrial wastewater treatment volume is rising year by year. The demand for upstream water treatment chemicals has a strong pulling effect. The supply of F nitrile and its downstream products is limited, and the current product price is still strong, and the profitability is strong: the company raised 7,000 tons of F nitrile and 2,500 tons of BIT have all been put into production, and the production capacity has climbed smoothly, from the price point of view, the intermediate F nitrile price is about 80,000, the BIT price is 20-250,000, and the product price is still strong. After the fourth quarter, production and sales are expected to increase significantly, and F-nitrile, BIT and MIT are future performance growth points: with the 7,000 tons of F-nitrile intermediates put into production in the fourth quarter, it is expected that the production and sales of F-nitrile and its downstream products BIT will increase significantly; At the same time, due to the impact of the shortage of supply of the intermediate 3-mercaptopropionic acid methyl ester, the price of MIT has risen significantly, the price of the product has risen from 60,000 to 140,000, coupled with the conversion of some CIT/MIT production capacity of the company, MIT production and sales will also be improved, F-nitrile-BIT and MIT will be the main profit growth point of the company in the future.