In January 2020, the National Development and Reform Commission and other nine departments issued a new version of the "Plastic Restriction Order", proposing to follow the principle of "banning one batch, replacing one batch, and standardizing one batch", divided into three periods: 2020, 2022, and 2025. Paragraph, clarify the phased tasks and objectives of strengthening plastic pollution control. Subsequently, many provinces and cities introduced a ban on plastics. Starting from December 1, 2020, Hainan took the lead in completely banning the sale and use of 10 types of plastic film bags, tableware and other disposable plastic products.

　　Under strict plastic restrictions, biodegradable materials have become the new favorite of capital. Danhua Technology (600844.SH) received daily limit for four consecutive trading days, and Huaxin New Materials (300717.SZ) and Silver Jubilee Technology (300221.SZ) both achieved a daily limit of 20%. Since the second half of 2019, many companies have announced their entry into the field of biodegradable plastics. It is essential for investors to identify who is following the trend and whose products are more marketable.

　　Market space and material prospects

　　The domestic plastic ban provides an incremental market, and performance, cost, pollution and other aspects determine the market share pattern.

　　Whether the market size of a field is large enough is an important prerequisite for measuring whether the performance of companies in the industry can double. Public information shows that China's output of plastic products in 2019 reached 81.84 million tons, accounting for a quarter of global plastic demand, while my country's consumption of biodegradable plastics accounted for only 4.6%, which is significantly lower than the global level. This means that China's stricter ban on plastics will bring a very large incremental market for biodegradable plastics.

　　The areas most suitable for replacing traditional plastics are express shopping bags, takeaway packaging and agricultural films. Different agencies have estimated that the space for substitution in these three areas by 2025 is about 2.35 million to 2.5 million tons, and the corresponding market size is about 47 to 50 billion yuan.

　　Among the current degradable plastics, starch-based degradable materials, PLA and PBAT occupy the mainstream. According to the report of Zhiyan Consulting, the three together account for about 90% of the degradable plastics market.

　　However, in terms of performance and cost, the starch-based degradable plastics with the highest proportion will not be further promoted in the future, mainly because the service life, mechanical properties and printing performance of starch-based degradable plastics are poor, and they cannot be completely degraded. Will still cause environmental pollution.

　　Most of the expansion of production capacity are PLA and PBAT projects. PLA uses corn starch as a raw material, and has high requirements for the degradation environment such as soil humidity and temperature, otherwise the degradation is extremely slow, and it loses the significance of replacing traditional plastics. Substituting PLA for one is that the cost of crops is higher, and the other is that it requires artificial energy and the environment during the degradation process, which undoubtedly increases the cost again, and the third is that there are requirements for storage conditions.

　　In comparison, PBAT uses petroleum as a raw material, has a lower cost and is relatively easy to degrade, and is considered to be one of the most active and market-applied degradable materials in the current research on biodegradable plastics. Moreover, the current PBAT production scale is relatively small and the processing cost is high, but as the scale expands in the future, the cost will further decrease.

　　Therefore, this article focuses on listed companies that produce PBAT-based biodegradable plastics.

　　At present, the supply of biodegradable plastics is in short supply, but domestic companies have laid out biodegradable plastic tracks, and the supply side is expanding rapidly. According to data from the Prospective Industry Research Institute, the production capacity is expected to exceed 4 million tons in 2025. At that time, there will be oversupply and gross profit margins will inevitably fall, so companies that can release their production capacity as soon as possible can enjoy more dividends.

　　Who is worth the money? Who is rubbing hot spots?

　　The most ambitious Changhong Hi-Tech

　　When it comes to production capacity, we have to mention the most ambitious Changhong Hi-Tech (605008.SH).

　　Changhong Hi-Tech is a high-tech enterprise in the thermoplastic elastomer (TPE) industry. Its product is a new type of polymer material that can replace traditional synthetic rubber. It is an upgraded variety of traditional synthetic rubber and is more environmentally friendly. It went public in August 2020, and after a short callback after the listing, it went up all the way, with the increase more than twice in just three months.

　　In addition to the factors of new stock speculation, there is another important reason-the announcement of the construction of the PBAT-PBS-PBT flexible production project with an annual production capacity of 600,000 tons. The project will be carried out in two phases, each phase of 300,000 tons per year. The total construction period is 5 years, of which the first phase will invest 1 billion yuan to build a project with an annual output of 100,000 tons.

　　PBS and PBT are not mainstream, and it is relatively difficult to produce scale effects. At present, the total domestic production capacity of PBAT does not exceed 300,000 tons, and Changhong Hi-Tech has increased by 100,000 tons at a time. It must be said that it is very ambitious. According to public information, the first-stage investment project can be completed in 2021 and will generate a net profit of 400 million yuan after reaching production capacity.

　　For Changhong Hi-Tech, 400 million yuan is equivalent to a 180% increase in net profit. In terms of economic benefits, Changhong Hi-Tech is indeed worth looking at.

　　It is worth noting that Changhong Hi-Tech has obtained the technical exclusivity in Zhejiang Province granted by Zhongke Qicheng New Material Technology (Hainan) Co., Ltd. by paying technology license fees. The latter is managed by Engineering Plastics of the Institute of Physics and Chemistry of the Chinese Academy of Sciences. The National Engineering Research Center team initiated the establishment. In other words, the technology is not in the hands of Changhong Hi-Tech. The agreement also stipulates that if Changhong Hi-Tech cannot be successfully constructed within 5 years, the exclusive right will be invalidated. In addition, the total assets of Changhong Hi-Tech are only about 2 billion yuan, and the funds raised by the IPO must be used for special purposes. The 1 billion yuan required for the initial investment is not a small figure.

　　Take advantage of BASF's Tongcheng new materials

　　The main business of Tongcheng New Materials (603650.SH) is to provide downstream tire manufacturers with supporting rubber additives, and it is also deploying new materials business in multiple dimensions. So far, there has been no production and sales of biodegradable plastic products, and the market has not risen in this wave.

　　In May 2020, Tongcheng New Materials was authorized by BASF to produce and sell certified PBAT according to BASF's high-quality standards. Tongcheng New Materials invested 670 million yuan to build a 100,000-ton/year biodegradable material project (Phase 1), of which the annual output value of PBAT is 60,000 tons, and it is planned to be put into operation in 2022. BASF is a German chemical company and one of the largest chemical plants in the world. Most of the foreign PBAT production processes are provided by BASF. Tongcheng New Materials has also established a joint development center for biodegradable materials with universities.

　　In order to build a degradable material project, Tongcheng New Materials issued convertible bonds to raise funds.

　　In 2019, Tongcheng New Material's revenue was 2.208 billion yuan, a year-on-year increase of only 1.52%. In the first three quarters of this year, revenue fell by 8.44% year-on-year, and its original business declined. PBAT may be the breakthrough point for Tongcheng New Materials' revenue and profit growth.

　　Self-reliant Ruifeng High Materials

　　Different from the above two companies, the technology of Ruifeng Advanced Materials (300243.SZ) is mastered through independent R&D and technical cooperation through its subordinate R&D center. It has successfully passed the pilot test, and the performance of the PBAT biodegradable plastic product has been Reach the international advanced level.

　　The PBAT biodegradable plastic project under construction by Ruifeng High Materials has a production capacity of 60,000 tons. The project is expected to be completed and put into production in the third quarter of 2021, and is expected to reach full production in the third year. It is put into production relatively early and can enjoy early price dividends. After the project is put into production, it is expected to increase operating income of 1.15 billion yuan and net profit of 107 million yuan.

　　In 2019, Ruifeng Gaocai's revenue was 1.213 billion yuan, and the net profit attributable to the parent was 75 million yuan. The economic benefits of the PBAT project are significantly better than the original business.

　　In addition, on October 24, 2020, Ruifeng Advanced Materials also signed a letter of intent with Shanghai Juyou on the planning of a biodegradable polymer material PBAT project with an annual output of 300,000 tons. The project has obtained the record certificate, safety assessment and environmental assessment. In the process of preparation, it is expected that the relevant procedures will be completed in the second half of 2021. Ruifeng Gaocai stated that the prerequisite for the construction of the project is the better development of PBAT.

　　Compared with Changhong Hi-Tech, which must build a production capacity of 60,000 tons/year within 5 years, Ruifeng Hi-Tech’s approach of walking and watching is more secure.

　　Kingfa Technology is a listed company with the highest existing PBAT production capacity, with 71,000 tons and an under-construction production capacity of 60,000 tons. However, the proportion of revenue and profit is not high. Similarly, Wanhua Chemical (600309.SH) and Hengli Petrochemical (600346.SH) also have PBAT projects under construction, but relative to the size of the entire company, the impact of the planned PBAT projects on revenue and profits Relatively small.

　　The adipic acid product of Huafeng Spandex (002064.SZ) is one of the raw materials for some degradable plastic products. Increasing downstream demand will also drive the sales of Huafeng Spandex products. In addition, its parent company Huafeng Group plans to invest 10 billion yuan in construction The annual production capacity of 300,000 tons will increase the sales of Huafeng spandex adipic acid products.

　　The plastic restriction order has substantive benefits for the above companies. As for whether they can really benefit, we need to pay close attention to the implementation of policies in various regions and the smoothness of project construction.

　　There are also some companies whose rise is only due to market sentiment.

　　The main products of Danhua Technology, which has four daily limits, are ethylene glycol and oxalic acid. PGA, a raw material for degradable plastics, is a by-product of Danhua Technology, and it is still in the research and development stage. The proportion of the revenue of the trial-produced degradable plastic products Only 1%, large-scale production has greater uncertainty. In addition, Danhua Technology incurred losses in 2019 and the first three quarters of 2020, resulting in greater operating pressure.

　　Silver Jubilee Technology (300221.SZ) performed well in this wavelet market. On December 2, it closed a daily limit of 20%. However, it revealed in August that the company’s biodegradable plastic products are still in research and development and downstream In the development of customer samples, sales have not yet been formed.

　　Lianchuang shares (002394.SZ) intends to build a 60,000-ton/year biodegradable material project, but based on its previous epidemic hot spots, it has realized a three-linked board, and its keen purchase has caused no synergy between its main businesses. In view of the huge impairment of goodwill, investors should be cautious about Lianchuang’s biodegradable plastic project.

　　The market sentiment speculation will inevitably return to its original shape. Only the real beneficiary stocks can enjoy the increase in valuation. Even if it is in the air, it must be able to distinguish the company's gold content.