Industry trends: according to the annual reports of listed companiesDailycoinsandspinsforcoinmasterIn 23, the basic chemical industry of Shenwan realized operating income 2Dailycoinsandspinsforcoinmaster. 10 trillion yuan, down 6% from the same period last yearDailycoinsandspinsforcoinmaster.43%, realizing a net profit of 110.6 billion yuan, down 45% from the same period last year, with a gross profit margin of 16.52% and a net profit rate of 5.56%. The price fluctuation range of chemical products in 23 years is less than 22 years, and the products are hovering between bottoming out and repair, and the average price is down about 5% compared with the same period last year. The 23-year demand recovery was less than expected, and profitability declined quarter by quarter, although there was a slight rebound in prices in July and August, but it lasted for a short time, and then prices gradually fell back to a lower point, so the industry climate continued to decline. The scale of profits fell for the whole year, and profit margins fell 4.33 percentage points to 5.56%. From the perspective of industry segmentation, the chemical fiber and plastic sectors are in a weak recovery, with a slight increase in income, and although profits have fallen by 30%, they have declined slightly in the secondary chemical industry. The income of pesticide products and chemical raw materials decreased the most, by 14.44% and 7.63% respectively, and their profits also decreased by 60.24% and 46.67% respectively. Overseas pesticide stocks were relatively high, demand was weak, and the prices of pesticide products fell below cost prices. Profitability dropped sharply, and profits of non-metallic materials performed well. According to the annual report and quarterly report of listed companies, in the first quarter of 2024, the operating income of Shenwan's basic chemical industry reached 491 billion yuan, down 2.65 percent from the same period last year; it dropped 6.08 percent from the previous month, and achieved a net profit of 28.9 billion yuan, down 13.86 percent from the same period last year and an increase of 100.36 percent. In the first quarter of 2024, sales profit margin was 6.18%, down 0.94% from the same period last year, up 3.46% from the same period last year; sales gross profit margin was 16.63%, down 0.69% from the same period last year, and up 0.27% from the same period last year. In the past 23 years, demand has declined quarter by quarter, the prosperity of the industry has been depressed, and product prices are on a downward trend, so profitability has declined quarter by quarter, and the industry boom has improved in the first quarter of 24. From the perspective of industry segments, rubber, chemical fiber and plastics have a large year-on-year increase in income, while the Ⅱ income of non-metallic materials has the largest year-on-year decline, reaching 26.53%. All secondary industries show a downward trend, but the decline of pesticide products is relatively small, followed by chemical raw materials, pesticide product prices basically hit bottom, and the space to continue to decline is limited. The net profit of rubber and chemical raw materials industry increased by 69.20% and 15.26% respectively, while the Ⅱ revenue of non-metallic materials decreased the most, reaching 49.29%. The month-on-month profit of each secondary industry improved significantly, of which the net profit of rubber industry, chemical fiber and plastics industry increased by 892%, 299% and 297% respectively. Investment advice: in the case of unstoppable capacity expansion in the industry, it still takes time to digest excess capacityDailycoinsandspinsforcoinmasterWe recommend three directions: first, leading companies with absolute cost advantage; second, a peak of capacity expansion has been completed, and the supply and demand pattern has improved; and third, subdivided industries with high technical barriers, less competition and obvious recovery of downstream demand. Leading companies are expanding against the trend: the leading chemical industry is expanding against the trend at the bottom of the cycle, which is expected to further expand its market share. At the same time, the leading white horse relies on the technical and cost advantages of surpassing the industry, the profit center at the bottom of the cycle is expected to rise steadily to achieve reverse growth, or will first usher in the opportunity to repair valuation. Polyester filament 24 years ushered in an inflection point: the industry is expected to increase production capacity at 1.15 million tons in 2024, and the release rate slows down, giving the industry a short respite. The demand for polyester filament has been in a state of recovery in 23 years, and the operating rate reached 85% in the second half of the year, which is at a better level in history. The export of polyester filament in 23 years is 3.35 million tons, an increase of 25% over the same period last year, which is also a record high. Industry warehouse is good, near the end of the year, Jiangsu and Zhejiang loom polyester filament (POY) inventory days dropped to 13.5 days, below the historical median. Combined with the above, the prosperity of the industry continues to pick up and profits improve. Refrigerant implementation industry quota, competition pattern improved: 2020-2022 third-generation refrigerant industry to compete for quotas, some products run at a loss, the price and profitability of third-generation refrigerants are at the bottom. After the end of the quota baseline period, the industry will turn around and return to profit orientation in 2023, and after production and sales according to quotas in 2024, industry quotas will be expected to be concentrated to the leader, forming a situation of oligopoly and improving the competition pattern of the industry. The demand for electronic chemicals is expected to recover: with the release and promotion of new smartphones at many terminals, the replacement cycle will be accelerated, and the consumer electronics market is expected to recover slowly and smartphone sales will pick up; the year-on-year decline in global shipments of PC has narrowed; the year-on-year decline in semiconductor sales has narrowed; and AI is expected to become a new round of demand driver in the smartphone and PC markets. The computing power of the processor installed in the AI is improved, and the specifications of the components that match the periphery should also be upgraded. Recommend Ruihuatai, Shengquan Group, Walter Gas, Haohua Technology. Risk hint: demand is lower than expected; product prices continue to fall. [disclaimer] this article only represents the views of a third party and does not represent the position of Hexun. Investors operate accordingly, at their own risk.

[disclaimer] this article only represents the views of a third party and does not represent the position of Hexun. Investors operate accordingly, at their own risk.