CITIC SEC: Bullish on high certainty sectors such as storage materials, nuclear power materials, OLED materials etc.

CITIC SEC released a research report stating that looking ahead to the entire second quarter, in a situation of high external uncertainty, sectors with high certainty that are less affected or even benefit from the rise in oil prices are expected to navigate through market volatility. It is recommended to have a strong outlook for sectors with high certainty such as storage materials, nuclear power materials, OLED materials, and to trade flexibly based on external situations. For example, if the war disturbance ends, it is advised to participate in trading opportunities in the fields of solid-state batteries, high-end ceramics, rockets, and satellites; if pessimistic expectations occur, and the situation in the Middle East deteriorates again, it is recommended to participate in trading opportunities related to crude oil. Recommendations for the second quarter of 2026 include a firm layout in sectors with high certainty while flexibly participating in trading opportunities. Since March 2026, the US-Iran conflict has become the most core factor affecting A-share trends. With the preliminary intention of a ceasefire negotiation reached between the US and Iran in early April, the market has begun to recover, but considering the significant differences in the negotiation goals of both sides, there still remains a great deal of uncertainty in the future situation. Looking ahead to the entire second quarter, CITIC SEC believes that in a situation of high external uncertainty, sectors with high certainty that are less affected or even benefit from the rise in the center of oil prices are expected to navigate through market volatility. Although the market has a certain degree of desensitization to the US-Iran conflict, it is expected that the future direction of the situation and the impact of oil prices on the market will still cause disturbances, and bring trading opportunities: if the situation improves, inflation and recession expectations decrease, market risk preference is expected to restore, and thematic trading opportunities will increase; if the situation deteriorates again, leading to a short-term and long-term rise in oil prices, it will also bring related trading opportunities. Sectors with high certainty in demand: 1) In terms of storage materials, AI-driven demand has brought storage into a super-boom cycle, with Chinese storage manufacturers accelerating expansion, expected to expand their market share in this cycle, and core suppliers of materials and components are expected to benefit fully; 2) In the nuclear power materials sector, the number of approved and started units for nuclear power companies remains high, with core components of approved units gradually being delivered, and it is expected that from 2026 to 2027, components will begin to enter a peak period of concentrated delivery, while nuclear fusion catalysis will release intensively, and valuation benchmarks are expected to significantly increase the valuation of nuclear power; 3) In the OLED materials sector, according to Jibang Consulting, with the landing and release of new 8.6-generation OLED panel capacity in the second half of the year, the shipment and penetration rate of medium-sized OLED screens are expected to increase, and there is optimistic about the demand for OLED panel-related materials. Thematic trading opportunities: 1) In the field of solid-state battery materials, policy + technology + industrial resonance, new products + bidding intensively in the second quarter of 2026, the commercialization pace of solid-state batteries is accelerating; 2) In the field of high-end ceramic materials, the sharp drop in the export of rare earth oxides and overseas inventory bottoming out, it is optimistic about the historical opportunity for the acceleration of domestic substitutes for high-end ceramics; 3) In the field of rocket & satellite materials, intensive catalytic events such as the reusable rockets in the second quarter of 2026 and SpaceX IPO, if China's technology for reusable rockets breaks through, the sector is expected to rise again. Trading opportunities related to crude oil: Even if a complete ceasefire occurs later, the damage to some infrastructure in the Middle East will lead to a contraction in oil supply for a certain period of time, coupled with the demand for replenishing stockpiles from various countries, CITIC SEC predicts that the center of the oil price will remain relatively high for a long time in the future, and the cost and price of petrochemical products are expected to fluctuate at high levels. Under this expectation, some coal-based products, bio-based products, and recycled plastics that can replace petrochemical products are expected to increase unit profitability, or increase market penetration, and are optimistic about the corresponding benefiting targets.