Bank of China Securities·2026-02-08 05:58Investment Rating - The report rates the chemical industry as "Outperform" [2] Core Views - The report highlights that international oil prices have retreated, while prices for caprolactam and vitamin E have increased. It suggests focusing on undervalued industry leaders, the impact of "anti-involution" on supply in related sub-industries, and the growing importance of electronic materials companies amid strong downstream demand [2][3] Summary by Sections Industry Dynamics - As of February 8, the TTM price-to-earnings ratio for the SW basic chemical sector is 28.57, at the 82.89 percentile historically, while the price-to-book ratio is 2.58, at the 73.42 percentile. The SW oil and petrochemical sector has a TTM price-to-earnings ratio of 15.16, at the 46.10 percentile historically, and a price-to-book ratio of 1.47, at the 50.93 percentile [3][12] - The report anticipates that the current round of industry expansion is nearing its end, with "anti-involution" measures likely to catalyze a recovery in industry profitability. New materials are expected to benefit from rapid growth in downstream demand, potentially initiating a new phase of high growth [3][12] Investment Recommendations - The report recommends focusing on undervalued industry leaders, the effects of "anti-involution" on supply in relevant sub-industries, and electronic materials companies that are increasingly critical in the context of strong downstream demand. Long-term investment themes include traditional chemical leaders showing resilience, the ongoing positive supply-demand dynamics in sub-industries like refining, polyester, dyes, organic silicon, pesticides, refrigerants, and phosphate chemicals, as well as the broad growth potential in new materials [3][12] - Specific stock recommendations include China Petroleum, China National Offshore Oil Corporation, China Petrochemical, Hengli Petrochemical, Dongfang Shenghong, Tongkun Co., New Fengming, Zhejiang Longsheng, Xingfa Group, Yangnong Chemical, Lier Chemical, Lianhua Technology, Juhua Co., Yuntianhua, Sailun Tire, Anji Technology, Yake Technology, Dinglong Co., Jiangfeng Electronics, Shengquan Group, Dongcai Technology, Zhongcai Technology, Hu Silicon Industry, Debang Technology, Yanggu Huatai, Wanrun Co., and Lite Optoelectronics. Stocks to watch include Rongsheng Petrochemical, Shanghai Petrochemical, Sanfangxiang, Wankai New Materials, Hengyi Petrochemical, China Resources Materials, New Yangfeng, Zhongce Rubber, Tongcheng New Materials, Huate Gas, Lianrui New Materials, Honghe Technology, Aolaide, Ruile New Materials, and Weike Technology [3][12] Price Trends - For the week of February 2 to February 8, 36 out of 100 tracked chemical products saw price increases, while 37 experienced declines, and 27 remained stable. Among the products, 61% had month-on-month average prices rising, 28% falling, and 11% remaining unchanged. The products with the highest weekly price increases included adipic acid, trichloroethylene, PVA, and phenol, while those with the largest declines included NYMEX natural gas, nitric acid, acetic anhydride, ethylene glycol, and coal tar [12][36] - The average price of caprolactam as of February 8 is 9,850 CNY/ton, up 2.34% week-on-week and 5.35% month-on-month, but down 10.05% year-on-year. The production volume for caprolactam is 123,237 tons, up 2.84% week-on-week but down 5.64% year-on-year [38] - The average price of vitamin E is 55.5 CNY/kg, up 3.74% week-on-week and 8.82% month-on-month, but down 57.31% year-on-year. The production volume for vitamin E in January 2025 is 10,000 tons, down 11.5% month-on-month [39]