发帖
雷达卡
Asia Chemical Sector
SECTOR REVIEW
Time to crack
We see a capacity growth bubble building among key commodity
chemical product chains, which Asian chemical players are exposed to.
We think supply pressure will mount from 2H08, or by 1Q09 due to delays,
and should be a stiff test for demand to overcome. As such, the four-yearold
chemical up-cycle faces downside risks. We forecast cracker margins
will fall 26% in 2008-09 and 20% in 2010, which should be the bottom.
■
Visibility on capacity growth looms larger. We see ethylene capacity
growth accelerating from 4% in 2007-08 to about 7.5% in 2009-10, the highest
annually in 19 years. Without a capacity growth cushion, our firms under
coverage in Taiwan and Korea are likely to face the full wrath of slowing global
demand growth. Our review of other cyclical commodity chemicals that Asian
chemical players are exposed to suggests a similar margin trend.
■
Stiff test for demand to overcome. For cyclical commodities, GDP matters.
A slowing US, and Europe at risk, are warning signs for demand. Our basecase
demand growth for 2009 is 4.1% (in line with historical average). For the
best case, where the US and Europe hold up, and China and India match their
highest demand of the past seven years, demand could reach 6.3% p.a. This
is still well below future supply growth. China and India account for 21% of
global demand. If part of China’s plastics demand is linked to exports, a slower
global economy would clip its demand contribution.
■
Chemical sector: earnings and valuation at risk. We are
UNDERWEIGHT the sector. We see potential downside of 40-60% to the
sector’s trough P/B. The greatest downside risk is on the Formosa Group,
PTTCH and Hanwha. Honam is already factoring in mid-cycle margins, but if
margins overshoot, potential downside to trough P/B remains extensive.
LG Chem is our relative choice, as about 35% of its earnings have been
diversified away from chemicals exposure.
221747.pdf
(1.13 MB, 需要: 3 个论坛币)
京公网安备 11010802022788号
