[Summary of Basic Chemical Industry Research Report]

The subsector that benefited most from the sharp decline in crude oil prices. (A) focus on short-term supply constraints, product prices are still further increased, product prices and raw material price spreads further expanded sub-industries: key MDI, TDI sub-industries; (2) The downstream demand of enterprises is relatively rigid, the price of products is stable or the price is less than the price of raw materials, and the profit trend is greatly improved by the fall of oil prices: focusing on the pesticide, daily chemical, conveyor belt industry.

Policy to stimulate the emergence of chemical industry thematic investment opportunities. The state may introduce a series of subsidy policies related to energy-saving household appliances and energy-saving automobiles, which will drive the theme investment opportunities of upstream raw materials enterprises of household appliances and auto-related chemicals: focusing on polyurethane, modified plastics and other sub-industries. The chemical sub-industries that benefit significantly after the acceleration of infrastructure construction investment are civil explosive and new coal chemical industry. The three emerging industries of new energy vehicles, energy conservation and environmental protection, and new materials involve more chemical targets, and we focus on growth stocks related to emerging industries with significant growth determination and valuation advantages.

The simulated portfolio is recommended in June. In June, we recommend investment benefit crude oil prices fell sharply to significantly improve the profitability of the sub-industry, while focusing on policy stimulus related theme investment opportunities, and in June, the second quarter performance of chemical enterprises is more clear, under the two main investment lines we selected the first half of the performance of high certainty, low valuation varieties, recommended portfolio in June: Yantai Wanhua, Hubei Yihua, Yangnong Chemical, Jiulian development, Qixiang Tengda.

Analysis of basic chemical industry operation situation. Chemical raw materials and products industry boom index, PMI index, PPI index show that the chemical industry boom downturn, the chemical industry industrial output value growth declined sharply, the total profits of the industry negative growth, we expect shock bottoming, weak recovery will run through the chemical industry in 2012.

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