20180903-广发证券_香港_-A-Share_Chemicals_Sector__National_standard_VI_to_boost_domestic_vehicle_catalytic_materials_market_2页_361kb

A-Share Chemicals Sector Summary

Core Content

The document discusses the impact of National Standard VI on the domestic vehicle catalytic materials market in China. It highlights the stricter emission regulations for both light and heavy-duty vehicles, and the resulting demand for advanced catalytic technologies and materials. Additionally, it provides sector and company ratings based on expected performance relative to the Hong Kong Hang Seng Index over a 12-month time horizon.

Key Information and Main Points

Emission Standards and Market Implications

• National Standard VI for light vehicles was issued at the end of 2016 and National Standard VI for heavy-duty trucks was issued on June 28 of this year, with phased implementation.
• The new standards are significantly stricter than previous ones:
  • Light vehicles: CO, THC, NOx, and PM emissions must be reduced by 50%, 50%, 40%, and 33% respectively compared to National Standard V.
  • Light diesel vehicles: NOx and PM emissions must be reduced by 81% and 33%.
  • Heavy-duty trucks: NOx and PM emissions must be reduced by 77% and 67%, with a new PN (Particulate Number) emission limit introduced.
• N2O (Nitrous Oxide) controls have also been introduced in the new standards.

Technological Upgrades and Material Demand

• To meet the new emission standards, gasoline vehicles need to be equipped with GPF (Gasoline Particulate Filter) technology.
• Diesel vehicles require a comprehensive configuration of DOC (Diesel Oxidation Catalyst) + DPF (Diesel Particulate Filter) + Zeolite SCR (Selective Catalytic Reduction) + ASC (Ammonia Selective Catalytic Reduction).
• Catalytic converters may lead to increased demand for specific materials:
  • Molecular sieves are key catalyst materials for SCR systems.
  • Honeycomb ceramics are important in various catalysts, with cordierite being the primary ceramic material used in tail-gas catalysts.
  • Alumina is an important coating material used in three-way catalytic converters, DOC, DPF, and ASC.

Market Growth and Opportunities

• The implementation of National Standard VI is expected to boost the domestic vehicle catalytic materials market.
• The honeycomb ceramics market could grow by 120 million liters.
• Corning (GLW US) and NGK currently dominate the honeycomb ceramics market with 90% market share, indicating significant import substitution potential for domestic companies.
• The demand for molecular sieves is estimated to increase by 6,000 tonnes due to the installation of SCR devices in diesel vehicles.
• Collaboration between domestic and international catalyst giants may create a promising outlook for the sector.

Sector and Company Ratings

• Sector Ratings:
  • Positive: Sector expected to outperform benchmark by more than 10%.
  • Neutral: Expected sector relative performance ranges between -10% and 10%.
  • Cautious: Sector expected to underperform benchmark by more than 10%.
• Company Ratings:
  • Buy: Stock expected to outperform benchmark by more than 15%.
  • Accumulate: Stock expected to outperform benchmark by more than 5% but not more than 15%.
  • Hold: Expected stock relative performance ranges between -5% and 5%.
  • Underperform: Stock expected to underperform benchmark by more than 5%.

Risks

• Environmental regulation implementation may fall short of expectations.
• Downstream auto market development could miss expectations, which may affect the demand for catalytic materials.

Conclusion

The implementation of National Standard VI is expected to significantly increase the demand for catalytic materials in China, particularly honeycomb ceramics and molecular sieves. This presents opportunities for domestic companies to substitute imports and grow in the market. However, the success of this transition depends on the effective implementation of the standards and the development of the downstream auto industry. The sector is rated Positive based on the potential for outperforming the benchmark, but there are risks that could affect its performance.