1、MMDisruption DecodedEVs+HSR:A Disruptive Force For China Oil Demand Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley R
2、esearch.Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures,refer to the Disclosure Section,located at the end of this report.+=Analysts employed by non-U.S.affiliates are not register
3、ed with FINRA,may not be associated persons of the member and may not be subject to NASD/NYSE restrictions on communications with a subject company,public appearances and trading securities held by a research analyst account.Unlike market consensus,we believe EVs+HSR is a unique travel mode in China
4、 that could sharply disrupt oil demand.We expect Chinas oil demand to peak in 2025,which could make battery companies key long-term winners at the cost of refiners.March 5,2019 09:00 PM GMTMMMORGAN STANLEY ASIA LIMITED+Andy Meng,CFAEquity Analyst+852 2239-7689Andy.M Contributors MORGAN STANLEY ASIA
5、LIMITED+Jack LuEquity Analyst+852 2848-5044Jack.LMORGAN STANLEY ASIA LIMITED+Albert LiResearch Associate+852 3963-3610Albert.LMORGAN STANLEY ASIA LIMITED+Jack YeungEquity Analyst+852 2239-7843Jack.YMORGAN STANLEY ASIA LIMITED+Tim HsiaoEquity Analyst+852 2848-1982Tim.HMORGAN STANLEY ASIA LIMITED+Edwa
6、rd H Xu,CFAEquity Analyst+852 2239-1521Edward.XMORGAN STANLEY ASIA LIMITED+Kevin Luo,CFAEquity Analyst+852 2239-1527Kevin.LMORGAN STANLEY ASIA LIMITED+Shawn KimEquity Analyst+852 3963-1005Shawn.KMORGAN STANLEY&CO.INTERNATIONAL PLC,SEOUL BRANCH+Young Suk ShinEquity Analyst+82 2 399-4994Young.SMMDisru
7、ption DecodedEVs+HSR:A Disruptive Force For China Oil Demand Why is consensus still bullish on China oil demand?The experi-ence in developed markets(DMs)suggests that oil demand from automobiles can continue to grow when the local economy is upgrading from emerging market(EM)to DM status,which is th
8、e macro path China is likely to follow in the coming decade.Also,Chinas recent crude import appetite remains strong,which further enhances consensus conviction that oil demand in China will keep growing until 2035-40.Why do we think differently?EVs+HSR(electric vehicles and high speed rail)is a disr
9、uptive force on China oil demand:We believe China is likely to display unique travel mode/behavior versus other DM countries.As illustrated in Exhibit 12,Chinas road traffic has continuously lost market share to railway traffic,which we believe is due to HSRs strong competitiveness in terms of conve
10、-nience and comfort.We believe more people in China will prefer the EVs+HSR travel mode,instead of driving traditional ICE vehicles for long distances.Our AlphaWise visualization analysis shows the den-sity and scale of the HSR network still has more room for develop-ment,while our case study(Exhibi
11、t 14)suggests EVs+HSR could consume zero oil versus 86L(22.7 gallons)per trip in an ICE vehicle.Significant EV penetration likely in 2025-40+more PHEV launching:Our auto team remains bullish on Chinas EV outlook and forecasts Chinas EV penetration to reach 6.4%by 2020,30%by 2030 and 80%by 2040.We al
12、so believe the plug-in hybrid electric vehicle(PHEV)could materially reduce gasoline consumption per vehicle,which is another disruptive force on gasoline demand,in addition to EVs.Battery technology innovation could make early disruption likely:In our latest battery trip in China,we found that loca
13、l battery companies are all aggressively carrying out R&D on NCM 811 bat-teries(so called because they have nickel-rich layered cathode mate-rials with an 8:1:1 proportion of nickel,cobalt and manganese,respectively)but there is lack of visibility about when NCM 811 can achieve scale production.If N
14、CM 811 innovation can achieve a break-through,that could accelerate the disruption given the energy den-sity would see a material improvement while battery costs will become more attractive.We expect China oil demand to peak in 2025,five to eight years ahead of market consensus:Considering the impac
15、t from EVs+HSR,we believe Chinas oil demand will peak in 2025 and gradually decline by 3.6 mnt per year from 2025.Such a scenario suggests China will no longer be the growth driver of global crude demand.We believe the refiners and petroleum stations are the largest potential losers,while the batter
16、y companies are likely to become the key win-ners in the coming five to seven years.We downgrade Sinopec to EW from OW after a recent 23%rally,as the risk-reward now looks fair in the near term.WHATS CHANGEDFromToChina Petroleum&Chemical Corp.(0386.HK)RatingOverweightEqual-weightPrice Target7.477.43
17、China Petroleum&Chemical Corp.(600028.SS)RatingOverweightEqual-weightPrice Target6.576.54Unlike market consensus,we believe EVs+HSR is a unique travel mode in China that could sharply disrupt oil demand.We expect Chinas oil demand to peak in 2025,which could make battery companies key long-term winn
18、ers at the cost of refiners.Industry ViewChina Energy&ChemicalsAttractiveM4M Contents 5Order of Preference6Key Stock Ideas7Why Are European/US Investors Bullish on Chinas Oil Demand?9Key Debate 1:Why Do We Believe EVs+HSR Is Likely to Become a Disruptive Force?17Key Debate 2:Do Hybrids Also Have an
19、Impact?19Why Could Battery Improvement Accelerate an Oil Disruption Scenario?22How We Derive our Base Case and Bear Case25Key Winners and Losers:Battery-related players versus Refiners28Whats Changed?31Valuation Methodologies And Risks35Risk-Reward:China Petroleum&Chemical H(0386.HK,HK$6.81,EW,PT HK
20、$7.43)36Risk-Reward:China Petroleum&Chemical A(600028.SS,Rmb6.08,EW,PT Rmb6.54)38Risk-Reward:PetroChina H (0857.HK,HK$5.32,OW,PT HK$5.89)39Risk-Reward:PetroChina A (601857.SS,Rmb7.57,UW,PT Rmb5.18)40 PetroChina:Financial Summary41Risk-Reward Snapshot:Contemporary Amperex Technology(300750.SZ,Rmb88.5
21、0,UW,PT Rmb64)43Risk-Reward Snapshot:Guoxuan High-Tech (002074.SZ,Rmb16.93,EW,PT Rmb14.00)45Risk-Reward Snapshot:Yunnan Energy New Material(002812.SZ,Rmb55.84,OW,PT Rmb53.00)47Risk-Reward Snapshot:Beijing Easpring(300073.SZ,Rmb31.31,OW,PT Rmb34.50)49 Risk-Reward Snapshot:Ningbo Shanshan(600884.SS,Rm
22、b15.63,EW,PT Rmb15.50)51Risk-Reward:Daqin Railway Co.(601006.SS,Rmb8.85,OW,PT Rmb12.89)53Risk-Reward Snapshot:Guangshen Railway(0525.HK,HK$3.46,EW,PT HK$3.85)54Reward Snapshot:Guangshen Railway(601333.SS,Rmb3.84,EW,PT Rmb4.21)56Risk-Reward Snapshot:LG Chem(051910.KS,W392,000,OW,PT W480,000)58Risk-Re
23、ward Snapshot:CRRC-H(1766.HK,OW,PT HK$10.40)60 Risk-Reward Snapshot:Times Electric(3898.HK,OW,PT HK$60.40)62Risk-Reward Snapshot:WeiChai-H(2338.HK,UW,PT HK$8.10)64 Risk-Reward Snapshot:Sinotruk(3808.HK,UW,PT HK$9.00)66 Risk-Reward Snapshot:Samsung SDI(006400.KS,OW,PT W260,000)MMORGAN STANLEY RESEARC
24、H5MOrder of Preference Exhibit 1:Order of Preference:EV+HSR value chain LG ChemSamsung SDIDQRTime ElectricCRRCEaspringYunnan Energy New MaterialPetroChinaShanshanGSR SinopecGuoxuan High-TechCATLWeichaiSinotruk051910.KS006400.KS601006.SS3898.HK1766.HK300073.SZ002812.SZ0857.HK600884.SS0525.HK0386.HK00
25、2074.SZ300750.SZ2338.HK3808.HKRatingOverweightOverweightOverweightOverweightOverweightOverweightOverweightOverweightEqual-WeightEqual-WeightEqual-WeightEqual-Weight UnderweightUnderweightUnderweightTrading CurrencyKRWKRWCNYHKDHKDCNYCNYHKDCNYHKDHKDCNYCNYHKDHKDPrice Target 480,000.00 260,000.00 12.89
26、60.40 10.40 34.50 53.00 5.89 15.50 3.85 7.43 14.00 64.00 8.10 9.00 Current Price 390,500.00 237,500.00 8.88 44.45 8.37 32.17 59.00 5.21 15.70 3.41 6.81 17.09 90.03 11.30 14.98 Upside/(Downside)(%)23%9%45%36%24%7%-10%13%-1%13%9%-18%-29%-28%-40%Market Cap(in USD mm)23,894.0 14,836.5 19,689.9 6,657.2 3
27、7,167.6 2,095.4 4,170.4 204,309.1 2,629.1 3,842.2 108,790.3 2,897.1 29,170.8 11,854.2 5,269.7 Avg Daily Traded Vol(in USD mm)73.9 70.8 40.9 13.6 19.5 49.6 13.2 89.8 58.3 1.9 107.9 29.3 159.1 15.9 13.3 Street View:RatingsBuy/OverweightHold/Equal-weightSell/UnderweightBuy/Overweight94%100%95%68%82%89%
28、100%65%80%56%86%59%78%53%42%Hold/Equal-weight6%0%0%26%14%5%0%35%13%44%10%18%0%27%25%Sell/Underweight0%0%5%5%5%5%0%0%7%0%5%24%22%20%33%Bull Case Value 580,000.00 310,000.00 15.66 99.80 16.30 44.00 78.00 7.27 24.00 5.46 9.72 23.00 89.00 11.30 30.00 Upside(%)49%31%76%125%95%37%32%40%53%60%43%35%-1%0%10
29、0%Bear Case Value 290,000.00 190,000.00 7.49 20.10 5.70 17.00 33.00 2.88 8.00 2.36 3.57 6.00 40.00 4.60 4.70 Downside(%)-26%-20%-16%-55%-32%-47%-44%-45%-49%-31%-48%-65%-56%-59%-69%Risk/Reward Skew1.91.54.92.33.00.80.70.91.12.00.90.5(0.0)0.01.5Morgan Stanley EstimatesFY18eKRWKRWCNYCNYCNYCNYCNYCNYCNYC
30、NYCNYCNYCNYCNYCNYSales 28,183,301 9,446,100 76,456 16,414 221,773 3,569 2,618 3,052,543 9,306 19,568 2,475,821 6,769 28,476 159,727 56,386 EBITDA 3,770,065 1,309,073 22,943 3,307 24,433 386 884 385,948 1,077 3,395 223,561 1,990 6,254 22,513 5,819 EBIT 2,246,511 718,463 17,165 2,886 17,000 330 827 13
31、1,461 743 1,674 115,130 1,025 4,325 14,682 4,555 EPS 21,406.82 10,366.00 1.07 2.37 0.43 0.70 1.46 0.29 0.39 0.18 0.50 0.63 1.67 0.98 1.21 FY19eSales 31,464,515 10,939,350 81,337 20,966 257,240 4,138 3,583 2,577,867 10,602 20,589 2,776,972 9,393 41,953 145,839 51,002 EBITDA 4,162,113 1,597,325 25,254
32、 4,356 28,412 637 1,397 330,117 1,534 3,862 205,534 2,504 8,430 20,742 4,649 EBIT 2,311,055 806,715 19,281 3,912 20,650 526 1,256 71,332 1,000 2,089 90,490 1,326 5,657 11,924 3,340 EPS 23,333.27 12,667.02 1.21 3.21 0.53 1.03 2.05 0.15 0.51 0.29 0.41 0.76 2.07 0.70 0.89 FY18 MSe vs.Consensus MeanSale
33、s1.3%0.4%3.7%3.8%1.3%-0.2%3.6%26.9%-9.6%-1.7%-7.2%11.9%-2.7%0.2%-7.8%EBITDA-2.7%-0.4%1.0%-1.1%1.5%-2.4%-2.2%5.6%-36.2%4.9%1.8%58.5%1.2%11.6%-9.6%EBIT-5.3%0.3%4.8%-1.5%-1.8%0.0%10.9%2.1%-35.9%9.2%10.0%14.8%0.1%15.8%-14.8%EPS-1.5%-7.1%9.4%4.3%2.2%0.9%27.1%-6.0%-59.5%-1.2%-12.0%-15.3%0.3%1.8%-11.6%FY19
34、 MSe vs.Consensus MeanSales0.6%-1.1%8.3%12.9%4.3%-12.2%2.1%5.8%-19.3%-2.7%3.1%14.9%6.5%-8.0%-18.0%EBITDA-1.0%-6.2%6.4%6.9%3.1%17.4%8.1%-9.6%-14.1%3.0%-8.1%74.3%3.1%3.7%-24.4%EBIT-3.3%-11.4%9.9%7.6%1.0%17.2%11.9%-44.8%-17.9%6.2%-13.1%30.4%4.5%-3.2%-35.4%EPS6.4%-13.0%21.8%14.7%7.7%11.2%12.4%-54.6%-44.
35、1%30.4%-25.7%-8.5%-1.1%-22.8%-33.1%Valuation Multiples at Last CloseFY18eP/E18.2x23.4x8.3x16.1x16.7x46.1x40.5x15.2x40.0 x16.5x11.5x26.9x54.0 x9.9x10.6xEV/EBIT 11.8x22.9x6.4x14.2x14.8x30.8x16.9x12.8x23.8x11.8x6.0 x14.5x35.1x5.1x5.5xEV/EBITDA7.0 x12.6x4.8x12.4x10.3x26.3x15.8x4.4x16.4x5.8x3.1x7.5x24.3x
36、3.3x4.3xEV/Sales0.9x1.7x1.4x2.5x1.1x2.8x5.3x0.6x1.9x1.0 x0.3x2.2x5.3x0.5x0.4xFCF Yield-7.0%-5.7%14.5%3.2%4.4%-0.9%-5.2%2.5%-8.2%5.1%14.8%-35.9%-3.1%9.7%6.9%FY19eP/E16.7x18.7x7.3x11.8x13.4x31.2x28.8x30.1x30.7x10.0 x14.2x22.5x43.6x13.7x14.4xEV/EBIT 14.3x22.5x5.8x10.1x12.0 x27.3x23.2x25.5x20.6x10.8x9.2
37、x17.0 x33.8x7.6x9.5xEV/EBITDA7.9x11.3x4.4x9.0 x8.7x22.5x20.8x5.5x13.5x5.9x4.0 x9.0 x22.7x4.4x6.8xEV/Sales1.0 x1.7x1.4x1.9x1.0 x3.5x8.1x0.7x1.9x1.1x0.3x2.4x4.6x0.6x0.6xFCF Yield-13.6%-3.9%14.5%3.9%4.7%-1.0%0.1%1.9%3.4%11.0%5.3%-11.4%-1.9%8.9%5.5%Implied Multiples on MS Price TargetFY18eP/E22.4x25.6x1
38、2.1x21.8x20.7x49.4x36.4x17.2x39.5x18.6x12.6x22.1x38.4x7.1x6.3xEV/EBIT 15.8x26.9x10.5x19.7x2.4x41.6x30.9x4.1x27.7x1.8x2.1x17.2x30.2x1.8x3.8xEV/EBITDA9.4x14.8x7.8x17.2x1.7x35.5x28.9x1.4x19.1x0.9x1.1x8.9x20.9x1.2x3.0 xEV/Sales1.3x2.0 x2.4x3.5x0.2x3.8x9.8x0.2x2.2x0.1x0.1x2.6x4.6x0.2x0.3xFY19eP/E20.6x20.
39、5x10.6x16.1x16.7x33.4x25.8x34.0 x30.3x11.3x15.5x18.4x31.0 x9.8x8.7xEV/EBIT 17.0 x24.4x8.9x14.2x1.8x23.5x20.9x7.8x20.4x0.8x2.9x14.4x23.8x2.1x5.3xEV/EBITDA9.4x12.3x6.8x12.7x1.3x19.4x18.8x1.7x13.3x0.4x1.3x7.6x16.0 x1.2x3.8xEV/Sales1.2x1.8x2.1x2.6x0.1x3.0 x7.3x0.2x1.9x0.1x0.1x2.0 x3.2x0.2x0.3xStock Pric
40、e Performance1 Month6.1%4.6%2.1%1.3%7.6%12.1%24.0%3%16.9%5.9%4%37.6%14.8%5%1%3 Month13.0%15.0%15.2%5.8%14.7%15.9%17.1%(5%)0.9%11.4%2%36.1%12.5%35%17%1 Year1.8%39.3%(3.4%)3.5%15.9%24.2%13.2%(5%)(15.3%)(33.0%)8%(18.2%)148.7%25%55%YTD12.5%8.4%7.9%2.4%9.6%16.2%19.4%7%21.5%15.6%22%47.8%22.0%26%27%Source:
41、Morgan Stanley Research,Thomson Reuters(consensus mean).e=Morgan Stanley Research estimatesNote:Past performance is no guarantee of future results.Results shown do not include transaction costs.Note:Pricing data:1 March,2019.M6MKey Stock IdeasTickerCompanyWinner or LoserSectorInvestment summary05191
42、0.KSLG ChemWinnerEV Battery MakerTo benefit from fast development of EV006400.KSSamsung SDIWinnerEV Battery MakerTo benefit from fast development of EV002074.SZGuoxuan High-TechWinnerEV Battery MakerTo benefit from fast development of EV300750.SZCATLWinnerEV Battery MakerTo benefit from fast develop
43、ment of EV300073.SZEaspringWinnerEV Battery ComponentsTo benefit from fast development of EV002812.SZYunnan Energy New MaterialWinnerEV Battery ComponentsTo benefit from fast development of EV600884.SSShanshanWinnerEV Battery ComponentsTo benefit from growing penetration of EV601006.SSDaqin RailwayW
44、innerRailway OperatorTo benefit from increasing volumes generally led by the penetration of EV+HSR mode0525.HKGuangshen RailwayWinnerRailway OperatorTo benefit from increasing volumes generally led by the penetration of EV+HSR mode3898.HKTimes ElectricWinnerRailway EquipmentTo benefit growing demand
45、 for high-speed mul-tiple units(MUs)amid further developed HSR network1766.HKCRRCWinnerRailway EquipmentTo benefit growing demand for high-speed mul-tiple units(MUs)amid further developed HSR network0386.HKSinopecLoserOil Refinery and MarketingEVs+HSRs disruption on oil demand will pose risks on Sin
46、opecs refining and marketing busi-ness0857.HKPetroChinaLoserOil Refinery and MarketingEVs+HSRs disruption on oil demand will pose risks on PetroChinas refining and marketing busi-ness3808.HKSinotrukLoserHeavy duty truckRoad to rail policy will continue to dilute demand from HDT to railway.2338.HKWei
47、chaiLoserHeavy duty truckRoad to rail policy will continue to dilute demand from HDT to railway.Source:Morgan Stanley ResearchMMORGAN STANLEY RESEARCH7MWe believe the market remains bullish on Chinas oil demand given 1)the experience in DM suggests that the travel mile per vehicle can continue to in
48、crease,which will lead to further growth in oil demand;and 2)Chinas recent crude appetite remains strong,therefore,the bullish view on China oil demand could find more spot data to support it.DM experience could lead to bullish view on oil demand as China is upgrading from EM to DMWhen investors loo
49、k at China from a top-down perspective,expecting the country to upgrade from EM to DM status in the coming decade is a reasonable assumption.As a result,the experi-ence in the US will become a good reference for the economic/oil demand outlook.As illustrated in Exhibit 2,the experience in the US sug
50、gests that the travel miles can grow steadily through the years,even with continuous engine efficiency improvement or the launch of Tesla in 2008.As a result,it may look natural to assume that China,with strong economic growth,continuing urbanization and a signifi-cant expansion of the middle class,
