Geopolitical Conflicts Reshape Valuation Logic: Peers Face Margin Pressure as Costs Surge, Wankay New Materials Poised for Full Release of Profit Elasticity

(Source: Caixin)

The Strait of Hormuz, a vital energy “throat” carrying nearly 20% of global oil trade, has once again become the market focus due to the ongoing escalation of Middle East tensions. Institutions warn that any disruption to transportation routes could cause unprecedented shocks to the global energy supply chain.

The Strait of Hormuz, a vital energy “throat” carrying nearly 20% of global oil trade, has once again become the market focus due to the ongoing escalation of Middle East tensions. Institutions warn that any disruption to transportation routes could cause unprecedented shocks to the global energy supply chain. Against the backdrop of rapidly rising energy security expectations and sustained high international oil prices, chemical product prices are entering a phase of comprehensive revaluation. In this round of market rally triggered by geopolitical crises, the logic has shifted significantly. The first to break out and show great resilience are not upstream petrochemical raw materials, but the midstream PET bottle chip segment. For Wankai New Materials (301216.SZ), this crisis is not a cost pressure source but a catalyst for full profit elasticity release.

Looking back at the start of this market rally, if we measure from the escalation of the US-Iran conflict and subsequent intensification of the Hormuz crisis, the stock price gains in related energy and chemical sectors are remarkable. The core driver behind this is the rise in oil prices leading to increased polyester costs, which in turn triggers downstream companies to panic-buy inventory in advance, ultimately causing PET bottle prices to exhibit the greatest price elasticity. Since March, the PET bottle chip market has experienced an unprecedented rapid rise. Mainstream spot prices have broken through 9,000 yuan/ton, with several industry leaders continuously raising quotes, with monthly increases exceeding 40%. Futures markets have been even more volatile, with the main PR contract surging to 9,282 yuan/ton intraday on March 16, and market sentiment index reaching extremely optimistic levels.

In typical cost transmission logic, rising oil prices usually mean soaring raw material costs for chemical companies, squeezing profit margins. However, Wankai New Materials has demonstrated unique risk resistance and profit advantages in this crisis, primarily due to differences in raw material structure and forward-looking inventory strategies. Unlike many peers relying on liquid petroleum derivatives as raw materials, Wankai’s main raw materials are gases. Amid the oil supply tightness caused by the Hormuz crisis and soaring liquid raw material prices, the cost advantage of gas-based routes is greatly amplified. Additionally, Wankai maintains ample raw material inventories, providing a strong safety cushion during periods of volatile raw material prices. While peers face high spot procurement costs and significant cost transfer pressures, Wankai benefits from low-cost inventories and stable gas supply, effectively avoiding rapid cost increases and even enjoying greater profit margins as product prices rise sharply with the market.

This relative stability on the cost side combined with rapid sales price increases directly leads to a sharp expansion of Wankai’s profit margins. Compared to peers burdened by soaring liquid raw material costs and struggling to pass on price increases, Wankai’s lower cost transfer pressure allows it to more easily convert upstream price hikes into real net profits. From the stock performance perspective, since the escalation of the US-Iran conflict, Wankai’s stock price has also risen significantly, with a cumulative increase of 19.06% from February 13, when the conflict intensified, to March 18.

It is worth noting that the current PET bottle chip price surge is not caused by a single factor. Besides cost-driven and supply contraction resonance, traditional peak season demand support has also played an important role. Starting in March, the beverage consumption stocking season has provided some demand backing and time buffer for the current high prices. Downstream beverage manufacturers are stocking up for the upcoming summer consumption peak, maintaining strong demand for PET bottle chips.

Objectively, the Hormuz crisis is not just a short-term price fluctuation but a stress test for the resilience of the chemical industry’s supply chain. In this test, Wankai New Materials has successfully turned external “danger” into an opportunity for growth, thanks to its differentiated raw material route and prudent inventory management. Although high international oil prices have raised the industry’s average costs, they have also accelerated the淘汰 of less competitive companies. For those with single raw material structures, fast inventory turnover, and weak bargaining power, high oil prices are a heavy burden; but for companies like Wankai with gas-based advantages and scale effects, high oil prices are a profit booster. Currently, PET processing fees have reached a historic high of 1,463 yuan/ton, indicating that downstream acceptance of bottle chip prices far exceeds expectations, and market demand shows strong resilience driven by inflation expectations and restocking needs.

In summary, the energy market triggered by the Hormuz crisis is essentially a deep restructuring of the cost structure and profit model of chemical companies. Wankai’s performance in this round is not a mere market gamble but a natural result of its long-term strategy of raw material diversification and meticulous inventory management under extreme market conditions. As geopolitical tensions continue to evolve, high energy prices may become the norm. Companies like Wankai, with low-cost gas routes and ample raw material reserves, are expected to continue releasing profit elasticity in this cycle, consolidating their leading position in the PET bottle chip industry.