Pipeline industry: clear growth momentum

Thanks to the large-scale construction and upgrading of people's livelihood projects such as drinking water, heating, gas, and drainage systems, the development of the pipeline industry has attracted the attention of the organization. According to recent financial game models, there are long-term funds to deploy such products in a planned manner. .

Downstream demand remains strong Currently, there are two main drivers for the pipeline industry to boost market demand. The first is the upgrading of the industry. The use of plastic substitute steel and plastic substitute cement pipes will be the main trend of the development of China's pipeline market in the future. The "tenth five-year plan for the national chemical building materials industry and the outline for the development plan for 2015" clearly point out that by 2005, the use of plastic pipes in various types of pipelines in the country should reach more than 50%; by 2015, 80% of the country's building drainage pipes. The use of plastic pipes basically eliminated cast iron pipes, and the use of plastic pipes in urban drainage pipes reached 50%. As far as the current pace of industrial evolution is concerned, there is a tendency to speed up the upgrading of the industry. Because in the “Twelfth Five-Year Plan”, China will continue to promote plastic pipes, especially in the areas of building drainage, indoor cold and warm water, drinking water, heating, gas, and drainage systems, and intensify promotion efforts, thereby expanding the development space of the industry. .

The second is strong market demand. In recent years, various areas in the country have frequently exposed many problems such as urban water shortages, indoor flooding, industrial drainage, pollution control, and gas safety. In addition, water shortages, rural irrigation and other issues are increasingly serious. Urban construction, rural development, and water conservancy facilities are all inseparable from the pipeline. It involves many links such as building water supply, building drainage, municipal water supply, rural water supply, outdoor drainage, industrial sewage, and gas pipelines. Therefore, the pipeline industry as a key direction of future investment in China, the market space is very large.

It is worth pointing out that the construction of water conservancy pipelines is facing the support of national industrial policies. After all, water conservancy construction is the key investment direction for future fiscal expansion policies. Oil and gas pipelines are also facing optimistic, robust industrial demand. According to the “Twelfth Five-Year Plan”, the total length of domestic oil and gas pipelines will reach 150,000 kilometers, that is, about 74,000 kilometers of new oil and gas pipelines, equivalent to 50 years before 2010. Based on this calculation, the annual average annual increase in new oil and gas pipelines is 14,000 kilometers and the use of oil and gas pipelines is approximately 6.5 million tons. Among them, the mileage of oil and gas pipelines constructed by CNPC during the “Twelfth Five-Year Plan” period will be twice that of the “Eleventh Five-Year Plan” period, reaching 54,000 kilometers. This means that the pipeline industry is in a booming period.

Product Alignment Guidelines Investment Direction However, at present, there are many products with low-end pipelines, and the competition among PVC and ordinary PE pipelines is fierce. The profitability of enterprises is not optimistic. At the same time, the raw material prices of products are subject to fierce fluctuations in crude oil prices, which further exacerbates the instability of the industry and the situation of low-end products is severe. In contrast, some listed companies in the industry are using the power of the capital market to vigorously develop high-end products such as PPR, PE, and HDPE double-wall corrugated pipes, which not only promote the structural adjustment of China's pipeline industry, but also promote the performance of these listed companies. Performance will accelerate growth.

From this we can see that product structure adjustments guide future investment directions. The adjustment of product structure mainly includes two aspects. First, the adjustment of the industrial structure of the industry itself, and the listed companies that meet the development trend of the industry are facing a better opportunity for growth. For example, in the subdivision of water conservancy pipelines, high-end products are in an explosive stage of demand, among which PPR pipelines use about 220,000 tons in 2007, about 340,000 tons in 2010, and 520,000 tons in 2013. The PE ground source heat pump pipeline and PERT pipeline are also in a period of rapid expansion with a compound annual growth rate of more than 20%. The demand for HDPE double-wall corrugated pipe in 2008 is about 120,000 tons, about 200,000 tons in 2010 and about 450,000 tons in 2013. Moreover, the competition of these products is not fierce, and there are opportunities for high-growth for those listed companies that have such products. The shares of Guotong, Nachuan, and Weixing New Materials can be tracked.

The second is to proactively adjust the product structure, expand production capacity, and have relatively fast growing stocks. For example, Yulong shares use listed funds to invest in oil and gas pipelines. In particular, Yili Yulong Steel Pipe Co., Ltd. has an annual output of 250,000 tons of oil, gas, and other long-distance pipelines. The project focuses on high-grade, large-diameter oil and gas pipelines and will be involved in oil and gas pipelines. The main line project helps improve the profitability of products. After the project is put into production, the capacity of oil and gas pipelines will also grow by leaps and bounds, jumping from the current 280,000 tons to 700,000 tons. Assume that in 2012, the output of spiral submerged arc welded steel pipes reached 100,000 tons and the gross profit of ton pipes was 1,000 yuan, and the gross profit contributed was 100 million yuan. This alone increased the gross profit by 26%, which is expected to promote the rapid growth of the company's performance. The Jinzhou Pipeline, Jiuliti Wood and other stocks can also be tracked.