IMO2020：需要更多的清洁能力

1、EquitiesAsia-PacificBy: Dennis Yoo, Parash Jain, Thomas C. Hilboldt, Rakesh Sethia, Paul Choi and Jeremy ChenApril 2019 HYPERLINK / Asia-Pacific Energy and IndustrialsIMO 2020 Wanted, more cleaning capacityThe expected level of compliance is rising the debate is now about the impact on fuel marketsU

2、nlike many in the market, we see a refinery upcycle as well as a need for more capacity to convert dirty fuelBut there will still be considerable disruption. We identify opportunities in the broad refining chain and selective industrial namesPlay interview withDennis Yoo and Parash JainDisclosures &

3、 Disclaimer: This report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, which forms part of it.THIS CONTENT MAY NOT BE DISTRIBUTED TO THE PEOPLES REPUBLIC OF CHINA (THE PRC) (EXCLUDING SPECIAL ADMINISTRATIVE REGIONS OF HONG KONG

4、AND MACAO)Why read this report?We update investors on the major changes that have taken place since our last major report on IMO 2020.We revisit our investment thesis based on higher compliance rates, faster scrubber penetration, and refinery reconfiguration plans.We highlight 11 misunderstandings a

5、nd/or misconceptions about the transition process.Contents HYPERLINK l _bookmark0 Why read this report?1 HYPERLINK l _bookmark1 Executive summary4 HYPERLINK l _bookmark2 Reality sets in15 HYPERLINK l _bookmark3 Shipping industry: Scrub it15 HYPERLINK l _bookmark4 Refining industry: Short lead time H

6、YPERLINK l _bookmark4 plans are set18 HYPERLINK l _bookmark5 IMO 2020 impact and market HYPERLINK l _bookmark5 balance: A conceptual framework20 HYPERLINK l _bookmark6 Assessing the impact on the HYPERLINK l _bookmark6 refining sector22 HYPERLINK l _bookmark7 Misconceptions and/or HYPERLINK l _bookm

7、ark7 misunderstandings about HYPERLINK l _bookmark7 IMO 202030 HYPERLINK l _bookmark8 Complexity should boost margin 30 HYPERLINK l _bookmark9 Buy complex refiners/only a few HYPERLINK l _bookmark9 high complexity refiners will benefit 31 HYPERLINK l _bookmark10 Diesel output maximisation HYPERLINK

8、l _bookmark10 can solve the problem31 HYPERLINK l _bookmark11 Yield adjustment is easy, HYPERLINK l _bookmark11 so the transition can also be made HYPERLINK l _bookmark11 without difficulty32 HYPERLINK l _bookmark12 Residue destruction is a HYPERLINK l _bookmark12 solution for market balancing32 HYP

9、ERLINK l _bookmark13 Gasoline and potentially jet fuel HYPERLINK l _bookmark13 could be oversupplied as refinery HYPERLINK l _bookmark13 throughput increases32 HYPERLINK l _bookmark14 Heavy to light conversion HYPERLINK l _bookmark14 will be rewarded34 HYPERLINK l _bookmark15 Heavy-light crude diffe

10、rential HYPERLINK l _bookmark15 will widen34 HYPERLINK l _bookmark16 The cycle could be very HYPERLINK l _bookmark16 short-lived as refiners can HYPERLINK l _bookmark16 quickly find a solution34 HYPERLINK l _bookmark17 An open loop scrubber ban HYPERLINK l _bookmark17 would materially undermine scru

11、bber HYPERLINK l _bookmark17 economics or incentives to install HYPERLINK l _bookmark17 scrubbers35 HYPERLINK l _bookmark18 Scrubber adoption will fade HYPERLINK l _bookmark18 as the premium of LSFO vs. HYPERLINK l _bookmark18 HSFO narrows36 HYPERLINK l _bookmark19 Appendix: Gasoil, diesel, and HYPE

12、RLINK l _bookmark19 the yield adjustment mechanism37 HYPERLINK l _bookmark20 Company section: Energy41 HYPERLINK l _bookmark21 Sinopec (0386 HK/600028 SS)42 HYPERLINK l _bookmark22 PetroChina (0857 HK/601857 SS)45 HYPERLINK l _bookmark23 SPC (0338 HK/600688 SS)48 HYPERLINK l _bookmark24 SK Innovatio

13、n (096770 KS)51 HYPERLINK l _bookmark25 S-Oil (010950 KS)55 HYPERLINK l _bookmark26 FPCC (6505 TW)59 HYPERLINK l _bookmark27 Reliance Industries (RELI BO)63 HYPERLINK l _bookmark28 Indian Oil (IOC BO)66 HYPERLINK l _bookmark29 Bharat Petroleum (BPCL BO)70 HYPERLINK l _bookmark30 Hindustan Petroleum

14、(HPCL BO)73 HYPERLINK l _bookmark31 Thai Oil PCL (TOP BK)76 HYPERLINK l _bookmark32 PTT GCI (PTTGC BK)80 HYPERLINK l _bookmark33 Company section: HYPERLINK l _bookmark33 Industrial companies85 HYPERLINK l _bookmark34 Hyundai Mipo (010620 KS)86 HYPERLINK l _bookmark35 Evergreen Marine (2603 TT)89 HYP

15、ERLINK l _bookmark36 COSCO Shipping Holdings (1919 HYPERLINK l _bookmark36 HK/601919 CH)92 HYPERLINK l _bookmark37 ESG Awareness and alpha96 HYPERLINK l _bookmark38 The big picture sustainability HYPERLINK l _bookmark38 focus96 HYPERLINK l _bookmark39 Case study S-OIL97 HYPERLINK l _bookmark40 Oil &

16、 Gas ESG issues and the HYPERLINK l _bookmark40 global IOC and NOC oil majors100 HYPERLINK l _bookmark41 Shipping more than just HYPERLINK l _bookmark41 IMO 2020 longer term initiatives 101 HYPERLINK l _bookmark42 Recent HSBC research on HYPERLINK l _bookmark42 macro/sub-sectors/regional/ HYPERLINK

17、l _bookmark42 company research102 HYPERLINK l _bookmark43 Disclosure appendix105 HYPERLINK l _bookmark44 Disclaimer108Recent HSBC research on IMO 2020 and other macro/sub- sectors/regional/company researchWe have written on IMO 2020 in a number of key reports over the past 12 months, including: HYPE

18、RLINK /R/20/pgfM9cN9eMAp IMO 2020: Expert call with Maersk - the practicalities of IMO 2020 (5 December 2018) HYPERLINK /R/20/vrnPz6X EEMEA Refiners: One more stop on the route to IMO 2020 (5 December 2018) HYPERLINK /R/20/ftRq7tRJB4ir Global Energy IMO 2020: Impact on crude oil market its inflation

19、ary (12 September 2018) HYPERLINK /R/20/qHCqqGWKnDpz IMO 2020_Feedback from the Road: Frequently Asked Questions (13 September 2018) HYPERLINK /R/20/ZTkMsKv Global Energy and Industrials: IMO 2020: A long bill for clean air (13 July 2018) HYPERLINK /R/20/xl2wvwM Global Integrated Oils: IMO 2020 and

20、Refining: The second windfall (13 July 2018) HYPERLINK /R/10/wRKwBN6JB4ir Asia Energy and Industrials: IMO 2020:Dirty to clean marine fuel: the disruption is real and near(13 July 2018) HYPERLINK /R/20/XcZXcKn Oil & oil product markets: IMO 2020: Choppy waters ahead (13 July 2018)Executive summarySh

21、ipping, machinery, energy, and logistics companies now recognise the new rules are going to happen and are moving to minimise the risks in the limited time still availableBut sizeable disruption in the value chain is inevitable due to insufficient pre-investment that will cause a product level suppl

22、y imbalanceGiven the stock markets preoccupation with macro uncertainty and price fluctuations, this paradigm shift is not adequately priced in, leaving investment opportunities that we identify in this reportComing to terms with the disruptionGreater compliance expected with on-vessel scrubbers the

23、 quick optionRefining industry is opting for short lead-time plans but these are unlikely to be enough to meet demandIt is now clearer than ever that the global rules for cleaner marine fuel are going to be in force on 1 January 2020, as planned. We were sure about this in our report HYPERLINK /R/10

24、/ZTkMsKvkR33W Global Energy and HYPERLINK /R/10/ZTkMsKvkR33W Industrial: IMO 2020 a long bill for clean air on 13 July 2018 and we are even surer now. In this update we look at what the relevant industry participants have done since that report to prepare for the International Maritime Organisations

25、 new sulphur emissions regulations, which the UN agency calls IMO 2020. The first point is that the shipping, refining, fuel logistics, and infrastructure value chains are increasingly coming to accept the reality that its happening and are moving quickly to capture the opportunities and avoid the r

26、isks. As a result, we believe compliance is likely to be greater than we thought.Scrubbers have been the preferred quick optionOne reason the affected industries have had to come to terms with this reality is that the authorities (especially China) are delivering a clear message that non-compliance

27、may result in business risks. But as the clock has ticked down, so the options have narrowed. One of the quickest is the installation of scrubbers (exhaust cleaning equipment) on existing ships. This has been the route many operators have taken and it has had a significant impact on fuel demand, pla

28、ying a critical role in making the transition easier.On the refining industry side individual companies have mostly put in place their own strategies to cope with the transition. In addition to the few cases of pre-emptive capex already planned before, it was clear that implementation was in fact go

29、ing to happen, some companies have come up with additional quick deployment plans for under-utilised assets. However, what most are doing consists of marginal reconfiguration plans altering feedstock, flow adjustment, cooperation with other refiners, early overhauling, etc. Some have limited flexibi

30、lity in operations and those that are better positioned are trying to maintain their output of non-compliant high sulphur fuel by reaching supply contracts with shipping lines that have scrubber installation plans in place. The rest will have no choice but to reduce their dirty fuel output and shift

31、 to more expensive valuable clean fuels.Disruption likely to be less pronounced than we thought, but still plenty of itBroad refining value chain and selective industrial stocks still look attractive11 misconceptions and/or misunderstandings about IMO 2020Recent moves are likely to mitigate the risk

32、 of abrupt and radical disruption, but we still think there isnt enough time for a perfectly smooth transition. While it is likely to be less pronounced than we thought, there is likely to be volatility in refining margins and a reshaping of the affected industries.There are still investment opportu

33、nities. The market has been distracted over the past several months because of global macro uncertainty and near-term price fluctuations. As a result the disruption implications of IMO 2020 have largely disappeared from investors view. This means there are still opportunities out there in the broade

34、r refining value chain as well as in selective industrial names, in our view. We like S-Oil, SKI, FPCC, RIL, BPCL, HPCL, IOC, Sinopec, PetroChina, Shanghai Petrochem, TOP, Hyundai Mipo, COSCO, and Evergreen.Outside Asia, we highlight that there are stocks having common exposure to our investment the

35、sis. We have Buy ratings on Repsol (REP SM, Buy, TP EUR18), Wartsila (WRT1V FH, Buy, TP EUR18), Tupras (TUPRS TI, Buy, TP TRY165, Hellenic Petroleum (ELPE GA, Buy, TP EUR11.7), and Rosneft OAO (ROSN LI, Buy, TP USD7.7). Grupa Lotos (LTS PW, Reduce, TP PLN75) is also likely to be positively affected

36、by the margin changes as a consequence of the IMO 2020 but we have a Reduce rating on valuation grounds.We identify 11 misconceptions and/or misunderstandings about IMO 2020 in this report, to help investors understand and better assess the market impact. See page 22 for a fuller discussion of these

37、 points:Complexity should boost margins. In fact, while refinery complexity is achieved through asset upgrades, the return enhancement can only be achieved when the aim and goal of the asset upgrade is aligned with what the market demands.Buy complex refiners/only a few high complexity refiners will

38、 benefit. Again, those with the most likely earnings upside are not the simplest or ill configured refiners, but those for whatever reason have disadvantages in cost structure.Diesel output maximisation can solve the problem. Diesel is not the only clean marine fuel alternative. Any yield adjustment

39、 within the clean marine fuel pool will not in itself help to resolve the dirty-clean fuel imbalance problem.Yield adjustment is easy, so IMO 2020 impact will be a zero sum game within the refining industry. For a complete transition there needs to be a full conversion from dirty to clean fuel toget

40、her with a yield adjustment within the clean fuel pool. Because it is unlikely to see a full scale dirty-to-clean conversion, we will need higher refinery throughput, which has to be preceded by higher industry margins.Residue destruction is a solution for market balancing. Similarly, converting res

41、idue in a form easier for marketing/dumping, such as asphalt, etc., doesnt help the dirty-clean fuel supply imbalance issue.Gasoline and potentially jet fuel could be oversupplied as refinery throughput increases. Higher crude runs do not necessarily translate into overproduction of gasoline/kerosen

42、e as secondary feedstock is rerouted into marine fuel pool.Heavy to light conversion will be rewarded. The challenge that the world will face with IMO 2020 is how to remove the sulphur with limited cleaning equipment. The regulation has nothing to do with heavy to light conversion.The heavy-light cr

43、ude differential will widen. Not necessarily the light-heavy differential expansion in the crude market will be an indirect result of a wider sweet-sour price differential.The cycle could be very short-lived as refiners can quickly find a solution. No. Given the investment lead time, we believe for

44、the desulphurisation margin to return to a normalised level will take at least 5-7 years.A widely enforced open loop scrubber ban will materially undermine scrubber economics or incentives to install scrubbers. A ban on discharge from open loop scrubbers would effectively mean ships will need to bur

45、n clean fuel while sailing in restricted waters, not everywhere. Scrubbers would remain attractive as the time spent in ports is only a fraction of the voyage, particularly for long-haul shipping routes.Scrubber adoption will fade as the premium of LSFO vs. HSFO narrows. As with all new products, th

46、e price of marine scrubbers could decline as new players enter the market and the scrubber equipment manufacturing sector gains economies of scale. A decline in scrubber prices could still drive demand from shipping companies even at a lower fuel price differential. So we expect scrubber installatio

47、ns to continue beyond the initial couple of years, albeit at a slower pace.Summary valuation and risksValuationRisksSinopec-H 386 HKCurrent price:HKD6.31Target price:BuyHKD7.68Up/downside:+22%To derive our H-share target price, we use a 2020e PB/ROE reference, for which we apply a 1.05x PB multiple

48、to 2020e BVPS of HKD7.32 vs. an expected 2020e ROE of 9.6. Our target multiple reflects a very slight premium to the PB/ROE trend which we believe is supported by the improving integrated downstream result, balance sheet strength, and dividend yield. The strong capital position also allows the compa

49、ny to undertake corporate actions and to potentially continue more generous normal and special dividends. Our target price of HKD7.68 implies c.22% upside from current levels; accordingly, we rate the stock Buy.Downside risks: lower oil prices and RM&C margins, slower marketing volume growth, lower

50、chemical margins, value-destructive M&A, lower- than-expected dividend payout, slower global and China economic growth rates, IMO being less margin-accretive than we expect, and potential hydrocarbon investment exclusion from portfolios.Thomas C. Hilboldt*, CFA | HYPERLINK mailto:thomaschilboldt.hk

51、thomaschilboldt.hk | +852 2822 2922Sinopec-A 600028 CHCurrent price:RMB5.70Target price:BuyRMB6.65Up/downside:+17%Our A-share target price is converted from our H-share target price based on our FX strategists end-2019e RMB-HKD forecast of 1.16 (from 1.12). Our A-share target price implies 17% upsid

52、e from current levels. We rate the stock Buy due to the companys balanced profitability and ability to pay dividends.Downside risks: lower oil prices and RM&C margins, slower marketing volume growth, lower chemical margins, value-destructive M&A, lower- than-expected dividend payout, slower global a

53、nd China economic growth rates, IMO being less margin-accretive than we expect, and potential hydrocarbon investment exclusion from portfolios.Thomas C. Hilboldt*, CFA | HYPERLINK mailto:thomaschilboldt.hk thomaschilboldt.hk | +852 2822 2922SPC-H* 338 HKCurrent price:HKD3.89Target price:BuyHKD5.18Up

54、/downside:+33%We maintain our Buy rating on SPC H-shares and our Hold rating on the companys A-shares. We base our target price on a 2020e PB of 1.38x referencing an ROE of 15% and book value of HKD3.76, or RMB3.26. Our target price of HKD5.18 implies 33% upside from current levels; accordingly, we

55、maintain our Buy rating on the stock.Downside risks to our view on the H- and include: narrowing chemicals margins, major operational disruptions, the government taking back extra refining gains from the oil product pricing collar, and slower-than expected demand growth.Thomas C. Hilboldt*, CFA | HY

56、PERLINK mailto:thomaschilboldt.hk thomaschilboldt.hk | +852 2822 2922SPC-A 600688 CHCurrent price:RMB5.30Target price:HoldRMB4.48Up/downside:-15%Our A-share target price is converted from our H-share target price based on our FX strategists end-2019e RMB-HKD forecast of 1.16 (from 1.12). Our A-share

57、 target price implies 15% downside from current levels. We rate SPC-A Hold as we believe the upside risks related to IMO 2020 and the overall improving share liquidity in the China market justify ongoing investment in the shares.Downside risks to our view on the A-shares include: narrowing chemicals

58、 margins, major operational disruptions, the government taking back extra refining gains from the oil product pricing collar, and slower-than expected demand growth.Upside risks to our view on the A-shares include a sharp rebound in oil prices, earlier-than- expected enforcement of the China VI fuel

59、 standard, asset injections from Sinopec, and improving refining and chemical demand.Thomas C. Hilboldt*, CFA | HYPERLINK mailto:thomaschilboldt.hk thomaschilboldt.hk | +852 2822 2922Wartsila WRT1V FHCurrent price:EUR13.68Target price:BuyEUR18.00Up/downside:+31.6%We apply an economic profit-based va

60、luation methodology for valuing Wrtsil. We use an unchanged Return on Incremental Capital (RoIC) assumption of 22%. We assume mid-term growth in Capital Employed of 5.5% (unchanged), which gives us a 10-year prospective CAGR of 4.6%, compared to a historical 10-year average CAGR of 6.7%. We calculat