中國煉油業(yè)：煉油和化工的基本面受到新產(chǎn)能的威脅

1、Global Research25 February 2020China Refining SectorUBS Evidence Lab inside: refining and chemicals fundamentals threatened by new capacityConstruction of new refining projects in China accelerated in H219Chinas refining and chemical fundamentals look challenging this year given construction on key

2、projects is faster than we expected and demand will likely be affected by the coronavirus. Using UBS Evidence Labs satellite images, we monitored the progress of four mega refinery projects in China: 1) Hengli refinery (HPIP, 20mt); 2) Zhejiang Petrochemical (ZPC, 20mt); 3) Sinopec Zhongke (10mt); a

3、nd 4) PetroChina Jieyang (20mt). Consistent with the companys feedback at the UBS Greater China Conference (GCC), the satellite images show ZPCs construction accelerated in H219. Zhongke has also made progress, but Jieyang has made limited progress. We believe the market may be too optimistic about

4、Sell-rated Sinopec Shanghai Petrochemical (SPC-A) and Rongsheng, while underestimating Buy-rated Henglis growth potential.ZPCs main refining/chemicals units completed; no material progress at Jieyang UBS Evidence Labs satellite images indicate ZPCs progress accelerated in H219, with its refining, ar

5、omatics and ethylene units almost complete and the fine chemicals unit under construction. It has also started groundlaying on its phase II refining capacity. Henglis ethylene unit is almost finished, and the construction of its two PTA units progressed quickly in H219. Zhongkes project progressed s

6、teadily and is likely to reach full capacity by end-2020 and ramp up production in 2021. While the coronavirus makes new projects start-ups uncertain, we still expect all projects except Jieyangs to advance more than we had assumed.Threatened refining outlook and even stronger headwinds for petroche

7、micalA heavy load of refining/chemicals projects are coming online in China this year. We expect refining fundamentals to be pressured in H120 due to ZPCs startup and the coronavirus, although some domestic pressure may be relieved as refined oil exports grow. We foresee strong headwinds for olefins

8、 as HPIPs, ZPCs and Zhongkes refinery projects all have olefin capacity, and coal- and gas-based capacity are also coming online in 2020. On top of this, we think PTAs fundamentals will be challenged by the additional capacity from Hengli and Rongsheng.We are positive on Hengli but cautious on most

9、other A-share refining stocks We think Henglis valuation does not fully reflect its growth potential. Rongshengs valuation is higher than peers even with the refining project coming online. SPC-As demanding valuation does not fully reflect the possible drop in the ethylene spread, while SPC-Hs (Buy)

10、s valuation is at a historical low, with a 25% A-H share premium.Figure 1: Earnings revision tableEnergyChinaEquitiesAmily GuoAnalyst S1460518050002 HYPERLINK mailto:amily.guo amily.guo+86-105-832 8845Price target (Rmb/sh)2019E earnings2020E earnings2021E earningsRmb mCompanyRatingNewOldChg.NewOldCh

11、g.NewOldChg.NewOldChg.600346.SSHengli PetchemBuy20.621.6-5%10,85210,8520%13,23214,212-7%15,09915,1680%002493.SZRongsheng PetchemSell7.98.2-4%2,3972,435-2%3,1743,366-6%5,5455,5530%600688.SSShanghai Petro-ASell2.752.95-7%2,0902,0900%1,9292,099-8%2,2332,2390%0338.HKShanghai Petro-HBuy2.682.85-6%2,0902,

12、0900%1,9292,099-8%2,2332,2390%Source: UBS-S estimates HYPERLINK / This report has been prepared by UBS Securities Co. Limited. This is a translation of a Chinese research note published by UBS Securities Co Ltd on 25 February 2020. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 38. UBS

13、does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a singleChina Refining SectorUBS-S Resear

14、ch THESIS MAPa guide to our thinking and whats where in this reportOUR THESIS IN PICTURESMOST FAVOREDLEAST FAVOREDHengli PetrochemicalRongsheng Petrochemical, Sinopec Shanghai Petrochemical-APIVOTAL QUESTIONSQ: Is progress on Chinas mega refining projects accelerating more than we expected?Yes, this

15、 has been the case for all projects except for PetroChina Jieyang. UBS Evidence Labs second set of satellite images of the four mega refinery projects shows ZPCs construction accelerated in H219, HPIP completed its ethylene unit and Sinopec Zhongke progressed steadily. However, PetroChina Jieyang di

16、d not make any material progress in H219.moreQ: Will the refining and chemical outlook worsen as supply accelerates and demand deteriorates?Yes. We expect refining fundamentals to be under pressure in H120 owing to ZPCs startup and the coronavirus. Since HPIP, ZPC and Zhongke have their own olefin c

17、apacity, we expect competition for ethylene to intensify, with a steeper cost curve as gas-based olefin projects come online. HPIPs new capacity could also weigh on PTAs fundamentals, in our view. We think the coronavirus could put pressure on chemical prices, but we expect these prices to recover i

18、f the virus is contained. moreUBS-S VIEWUBS Evidence Labs satellite images show ZPCs construction accelerated in H219, with its main refining/chemicals units largely complete, and Zhongke also made progress. Amid a peak in refining/chemicals projects coming online in China in 2020E, we think chemica

19、ls (especially olefins) could struggle. At the same time, the coronavirus, US-China trade war and plastic bans could exacerbate the uncertainties on demand for chemicals. Of the refiner stocks we cover, we recommend Hengli and are bearish on SPC-A and Rongsheng.EVIDENCEUBS Evidence Labs satellite im

20、ages suggest ZPCs atmospheric and vacuum distillation, continuous catalytic reforming, aromatics and olefins units are complete, while its polypropylene, polycarbonate (PC) and phase II refining/chemicals capacity are under construction; Henglis ethylene unit is largely completed while its PTA unit

21、has made rapid progress; Zhongkes refining, ethylene and ethylene glycol units are largely complete; and Jieyang did not make any material progress.WHATS PRICED IN?From a valuation perspective, we think Henglis growth potential is not fully priced in and Rongshengs valuation is still more demanding

22、than peers even though its refinery project is coming online. We believe SPC-As valuation does not fully reflect the markets expectations that olefins fundamentals could face strong headwinds.moreUBS Evidence Labs monitoring of four mega refinery projects in ChinaNote: Hengli Petrochemical refinery

23、HPIP; Rongsheng Refinery ZPC; PetroChina Refinery PetroChina Jieyang; Sinopec Refinery Sinopec Zhongke. Source: UBS Evidence Lab; Digital Globe., UBS-SChina Refining SectorUBS-S ResearchOUR THESIS IN PICTURESreturn Progress of ZPCs continuous catalytic reforming/hydrogenation unitsProgress of HPIPs

24、ethylene unitChinas refining capacity growth forecastsForward PE band from listed refiners (from 2015)Lowest highestCompared with UBS Evidence Labs first set of satellite images in May 2019, the second set of satellite images in December 2019 show ZPCs construction accelerated in Q419, with its refi

25、ning, aromatics and ethylene units largely complete.Based on UBS Evidence Labs satellite images, Henglis purified terephthalic acid (PTA) units were almost complete in late 2019 and its ethylene unit progressed quickly. We expect these to come online in H120.We expect 33/6 million tonnes per annum (

26、mtpa) of new refining capacity in China in 2020/2021E, with a YoY increase of 4% in 2020E and 1% in 2021E. Zhongke could reach its targeted capacity in late 2020E, but would mainly contribute output in 2021E.5040Currently, Henglis valuation is at a historical low. We30believe the market has underest

27、imated its growth potential. Rongshengs valuation is higher than peers.20SPC-As valuation is higher than SPC-Hs.100Sinopec -ASPC-ASPC-HHengliRongshengTongkunSource: Company data, Digital Globe, Wind, China Petroleum and Chemical Industry Federation (CPCIF), PetroChina Research Institute, UBS Evidenc

28、e Lab, UBS-SChina Refining SectorUBS-S ResearchPIVOTAL QUESTIONSreturn Q: Is progress on Chinas mega refining projects accelerating more than we expected?UBS-S VIEWYes. For the second time, UBS Evidence Lab monitored the progress of four mega refinery projects under construction in China using satel

29、lite images. These are HPIP, ZPC, Sinopec Zhongke and PetroChina Jieyang. Compared with the satellite images from mid-2019, ZPCs construction accelerated in H219, with its refining, aromatics and ethylene units largely complete. HPIPs ethylene unit is complete and its PTA units are also largely fini

30、shed. Zhongke progressed steadily, but Jieyang did not make any material progress. However, the coronavirus might negatively impact further progress in 2020.EVIDENCEUBS Evidence Labs monitoring results:ZPC (20 million ktpa refinery): Compared with UBS Evidence Labs first set of satellite images in M

31、ay 2019, the second set of satellite images in December 2019 show ZPCs construction accelerated in H219, with its refining, aromatics and ethylene units largely complete. Its fine chemicals unit progressed slower than the main refining unit. In addition, UBS Evidence Labs images indicate ZPCs phase

32、II refining capacity has begun initial construction.HPIP (20 million ktpa refinery): UBS Evidence Labs satellite images from October 2019 indicate HPIPs refining unit was running steadily. Its ethylene unit is almost complete and the construction of its two PTA units has progressed quickly.Zhongke (

33、10 million ktpa refinery): UBS Evidence Labs satellite images in October 2019 show the construction of Sinopec Zhongke progressed steadily in H219. Compared with the first set of satellite images in July 2019, the progress was significant, but the main refining/chemicals units were not yet complete.

34、 In addition, the satellite images show the construction of Zhongkes chemicals units were progressing steadily, with its ethylene oxide/ethylene glycol/ethylene (EO/EG) and high-density polyethylene (HDPE) units already beginning to take shape in late October.Jieyang (20 million ktpa refinery): UBS

35、Evidence Labs satellite images in October 2019 show a lack of material progress.WHATs PRICED IN?From the 12-month forward PE and P/BV perspectives, Henglis current valuation is still at a historical low. We believe HPIPs growth potential and profitability are not fully priced in. Although ZPCs progr

36、ess has accelerated, Rongshengs current valuation is still more demanding than peers. Even taking into account the refining project coming online, Rongshengs 2021E PE of 12.4x is still higher than the A-share average of 11.4x and the Asia Pacific average of 11.7x.Brief introductionChina kicked off a

37、 new cycle of refinery capacity launches in 2019. Mega projects such as HPIP and ZPC have made some progress in construction or are even near start-up. Construction of Sinopec and PetroChinas new refineries are also moving ahead. In our view, this intensifies Chinas existing oversupply of refinery c

38、apacity and has profound implications for APAC refining and chemical fundamentals. Against this backdrop, we use UBS Evidence Labs satellite images to better gauge the progress of four under-construction mega refineries: HPIP, ZPC, Sinopecs Zhongke Refinery and PetroChinas Jieyang Refinery. The find

39、ings of the monitoring period in May-July 2019 were published in September 2019 (UBS Evidence Lab inside: satellite imagery indicates slower refining capacity growth in China).This note is our second monitoring report, using satellite images from October to December 2019. We aim to keep track of the

40、 construction of refining capacity in China by leveraging UBS Evidence Labs satellite images and feedback from the companies management. We also estimate the possible timing for when this capacity could come online.Main conclusionZPC: Construction accelerated in H219, with main refining/chemicals un

41、its largely complete. Compared with UBS Evidence Labs previous set of satellite images, the latest images show ZPCs construction accelerated in H219, with its refining, aromatics and ethylene units largely complete as of late 2019. Given refining capacity usually need one to two quarters to increase

42、 load, we expect ZPCs main refining/chemicals units to reach full capacity in mid-2020 and its fine chemicals units to progress slower than the main refining unit. We expect its phenol, PC and methyl methacrylate (MMA) units to reach their targeted capacity in Q220, if everything goes well. In addit

43、ion, UBS Evidence Labs images suggest ZPCs phase II refining capacity (20mtpa, same as phase I) has begun initial construction.HPIP: Ethylene unit almost complete. The previous satellite images showed HPIPs refining and aromatics units were complete and had come online, and the latest satellite imag

44、es show the refining unit was running steadily. HPIPs ethylene unit was also largely complete and we think it could come online in Q120. The construction of its two PTA units progressed at a swift pace, and we expect them to come online in H120.Zhongke: Progressing steadily. UBS Evidence Labs satell

45、ite images in October 2019 showed that the construction of Sinopec Zhongke progressed steadily in H219, but the main refining/chemicals units were not yet complete. In addition, the satellite images show the construction of Zhongkes chemicals units were also moving forward, with its ethylene oxide/e

46、thylene glycol/ethylene and HDPE units already beginning to take shape in late October. Based on the satellite images, we expect Zhongke to come online in mid-2020 and reach full capacity by the end of 2020.Jieyang: Still no material progress. UBS Evidence Labs satellite images show the project stil

47、l did not make any material progress in H219. We still expect the project to come online after 2022.However, the coronavirus could make further progress uncertain as: 1) workers returned to work later due to the extended Chinese New Year (CNY) break; and 2) transportation restrictions could adversel

48、y impact the procurement and delivery of construction material. Construction progress from late January to February has halted, and the resumption still depends on the potential containment of the virus.Figure 2: Results from monitoring Chinas mega refining projects and changes in expectations of th

49、em coming onlineMonitoring results (Q419)Change inRefiningChemicalsexpectationExpectation in Q120Expectation in Q319ZPCAtmospheric and vacuum distillation and continuous catalytic reforming units were completedAromatics and olefins units were completed; polypropylene, PC and phase II refining capaci

50、ty were under constructionEthylene unit largely completed; PTA unitEarlierExpected to come online in mid-2020Ethylene and PTAExpected to come online in H220Ethylene and PTAHPIPRefining unit came online in H119Made significant progress, but Zhongkeatmospheric and vacuum distillationunit was not yet c

51、ompletedprogressed quicklyThe ethylene oxide/ethylene glycol/ethylene and HDPE units already began to take shape in late OctoberNo changeEarlierunits expected to come online in 2020Expected to come online in late 2020Expected to comeunits expected to come online in 2020Expected to come online in 202

52、1Expected to comeJieyangStill no material progressStill no material progressNo changeNote: Coming online means being operational and reaching the utilisation level during normal operation. Source: UBS Evidence Lab, Digital Globe, UBS-S estimatesonline after 2022online after 2022ZPC: Construction acc

53、elerated in H219With the largest projects under construction in China, ZPC will likely become the countrys largest refining enterprise once its phase II is complete. With investments by Rongsheng (51%), Tongkun (20%), Juhua (20%) and Zhoushan Marine Comprehensive Development (9%), ZPC currently has

54、a total planned capacity of 40mtpa for refining, 10.4mpta for aromatics and 2.8mtpa for ethylene.The project is split into two stages, with phase I having 20mtpa of refining capacity, 5.2mtpa of aromatics capacity and 1.4mtpa of ethylene capacity. The main facilities include 22 refining units and 15

55、 chemical ones. Phase II is identical to phase I with respect to core refining, aromatic and ethylene units, and both include 22 refining and 12 chemical units.Figure 3: ZPCs planned facilities and capacity (0000 tpa)No.Unit namePhase I (0000 tpa)Phase II (0000 tpa)Refinery area1Atmospheric and vacu

56、um distillation unit200020002Light hydrocarbon recovery unit3003603Coking unit300Reliant on phase I4Residue hydrodesulphurization unit5005005Wax oil hydrocracking unit3803806Diesel hydrocracking unit8008007Heavy oil catalytic cracking unit4204208FCC gasoline hydrotreating unit2002009Light gasoline e

57、therization unit454510Aviation kerosene refining unit15015011Naphtha hydrotreating unit32032012Continuous catalytic reforming unit80080013Aromatics unit52052014Gas fractionation unit909015C3/C4 separation unit11011016MTBE unit181817Alkylation unit456018C5 positive separation device15018019C1/C2 sepa

58、ration unit30/6020/6020Desulfurization/LPG sweeten unit40/14040/14021Coal tar-to-gas unit800k Nm3/h800k Nm4/h22Sulphur recovery complex4860Chemical area1Ethylene unit1401402Propane dehydrogenation unit606031-hexene-54FDPE unit45455HDPE unit30-6EO/EG unit5/7510/657EVA/LDPE-10/308Styrene (incl. ethylb

59、enzene) unit120609PP unit909010Butadiene extraction unit202011MTBE/1-butene unit10/5-12Pyrolysis gasoline hydrotreating unit1158513Phenol-acetone40/25-14Bisphenol A232315Polycarbonates262616Acrylonitrile26-17MMA9-Source: Company data, compiled by UBS-SFigure 4: ZPCs planned feedstocks and products (

60、0,000 tpa)No.ProductPhase I (0000 tpa)Phase II (0000 tpa)Refinery area1Propylene27.65 (feed of chemical zone)32.76 (feed of chemical zone)2Propane47.93 (feed of chemical zone)49.66 (feed of chemical zone)3China VI gasoline378.85378.424Jet fuel284.41290.465China VI diesel172.811556Benzene151.91129.03