In the first quarter of 2022, the revenue and profit of chemical enterprises increased steadily, and the profitability repaired significantly month on month. The revenue and profit growth of the upstream sub industry ranks first. With the gradual transmission of crude oil costs to downstream chemicals, the demand will recover after the epidemic is controlled. The current static valuation is low, maintaining the industry's stronger than the market rating.
Key points supporting rating
In the first quarter of 2022, the price of crude oil rose significantly, the price of petrochemical products generally rose, and the revenue and profit growth of upstream sub industries ranked first. The total operating revenue of the whole industry was 2327.784 billion yuan, an increase of 34.01% year-on-year; The net profit attributable to the parent company totaled 138.164 billion yuan, an increase of 30.51% year-on-year. The annual gross profit margin and net profit margin of the industry decreased by 1.87pcts and 0.28pcts, respectively, to 20.06% and 6.59%. Roe (diluted) was 3.57%, up 0.53pcts year-on-year. In the first quarter of 2022, the operating revenue increased by 4.22% month on month, the net profit attributable to the parent company increased by 77.45%, the gross profit margin decreased by 0.43pcts month on month, and the net profit margin and ROE (diluted) increased by 2.66pcts and 1.48pcts respectively.
In terms of molecular industries, in the first quarter of 2022, among the 38 sub industries except viscose, only the chlor alkali sub industry saw a year-on-year decline in revenue, while the revenue of other sub industries achieved positive growth year-on-year, of which the revenue of 7 sub industries increased by more than 50% year-on-year. In the first quarter, the geopolitical situation significantly affected the supply of chemical fertilizer, and the prices of major products in the chemical fertilizer sector increased significantly. The revenue of the sub industries of potash fertilizer, compound fertilizer, phosphate fertilizer and nitrogen fertilizer increased by 163.90%, 43.53%, 36.22% and 22.02% year-on-year respectively. In terms of profit, it is mainly concentrated in the upstream sub industries. Among the 38 sub industries excluding viscose, the net profit attributable to the parent of 23 sub industries increased year-on-year in the first quarter of 2022, of which the net profit attributable to the parent of 12 sub industries increased by more than 100% year-on-year. The year-on-year increase in the net profit attributable to the parent company of potash fertilizer, civil explosive products and fluorochemical industry was the highest, with 331.62%, 310.03% and 262.62% respectively.
In the first quarter of 2022, the construction in progress in the chemical industry was 818.584 billion yuan, an increase of 21.35% year-on-year, an increase of 2.28% over the beginning of the period. Among the 38 sub industries, only other chemical raw materials, civil explosives, nitrogen fertilizer, soda ash and potassium fertilizer projects under construction decreased year-on-year, and the projects under construction in other sub industries showed an upward trend. The sub industries with a year-on-year increase of more than 100% in the construction in progress in the first quarter of 2022 include modified plastics, spandex, rubber additives, carbon black, nylon and silicone. The amount of fixed assets in the chemical industry in the first quarter of 2022 was 2292.601 billion yuan, an increase of 9.06% over the same period in 2021 and 1.11% over the beginning of the period. The sub industries with the largest year-on-year increase in fixed assets include semiconductor materials, other chemicals, adhesives and tapes, electronic chemicals, and non-metallic materials, with year-on-year increases of 43.42%, 39.97%, 37.14%, 34.61%, and 30.91% respectively.
