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[Polyester Session] Polyester industrial development tendency analysis in China
!!Yu Xiaobo, Managing Director, Chief Analyst of chemical fiber industry from Caitong Securities

2019-03-21 15:28:10
Yu Xiaobo, Managing Director, Chief Analyst of chemical fiber industry from Caitong Securities, delivers his report of What should we pay attention to except for the polyester industry itself? 

He interprets the impacts on polyester industry from three aspects. 

Firstly, macro environment. Industrial economy should focus on price, quantity and cycle. M1 affects the liquidity on futures market and RRR cut, detonates commodity bull market. From the perspective of the economic cycle, backward production capacity has been cleared (Reform of supply side in 2015 accelerated the process of clearing out). The reversal began from the end of 2016. PFY production kept growing under above 15% of growth rate for two consecutive years. Social finance leads PMI and industrial enterprise profits 3-4 quarters. The latest answers to reporters¨ request of People¨s Bank of China and the government work report also released favorable news to the industry. 

Secondly, private refinery, more than PX. The great hydrogenation capacity and scale of aromatics make the refineries competitive enough. High Nelson complexity index reflects possible considerable profits. After large capacity expansion, PX market may be burdened with surplus and the profits of industrial chain may be reallocated. In short run, PX-PTA spread is expected to shrink in 2019 and PTA profits may improve. Differences between PX and PTA expansion is that PX enterprises are more willing to sustain prices. 

Thirdly, capital market. The secondary market is an important platform for polyester companies to expand toward upstream, like Hengli Petrochemical and Rongsheng Petrochemical. The logic behind ^positive feedback of performance - capacity - stock price ̄ is financing and M&A to enhance brand reputation and market reputation, like Tongkun Group and Hengyi Stocks. 

There are two significant ways to make use of capital. Proposed listed companies: take the initiative to grasp the development logic and select timely. Mergers and Acquisitions: accelerate industrial integration. 

At last, he mainly introduces the latest merger and acquisition policy and Advantages of Caitong Securities in helping chemical fiber enterprises to make use of capital. 
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