Market Performance - In 2024, the fluorosilicon chemical industry experienced significant market fluctuations, with some products like R22 and R32 seeing substantial price increases due to quota restrictions[6][11]. - The overall production of key products increased compared to 2023, contributing to the Group's stable performance amidst intense market competition[12][14]. - The refrigerants segment generated revenue of RMB3,247,702,000 with an operating margin of 24.83%, significantly up from RMB2,871,580,000 and an operating margin of 10.82% in 2023[35]. - The fluoropolymers segment reported revenue of RMB3,824,967,000, with an operating margin of 13.28%, compared to RMB4,552,407,000 and 7.40% in the previous year[35]. - The organic silicon segment saw revenue increase to RMB5,212,703,000, with a slight operating margin of 1.95%, recovering from a loss of RMB330,512,000 in 2023[35]. - The refrigerants segment experienced significant price increases for R22 and R32 due to quota policy impacts, contributing to revenue growth[45]. Financial Performance - For the year ended December 31, 2024, the Group recorded revenue of approximately RMB14,181,087,000, a decrease of 2.15% from RMB14,493,323,000 in the previous year[31]. - Gross profit margin increased to 21.62% compared to 16.81% in 2023, while operating margin rose to 10.01% from 4.49%[32]. - The Group achieved profit before tax of approximately RMB1,423,046,000, up from RMB653,171,000 in 2023, and net profit of approximately RMB987,497,000, compared to RMB611,085,000 in the previous year[32]. - The fluoropolymers segment achieved a profit of RMB508,088,000, an increase of 50.87% from RMB336,766,000 in the same period last year[39]. - The refrigerants segment recorded a profit of RMB806,356,000, up 159.63% from RMB310,574,000 in the previous year[44]. - The organic silicon segment turned a profit of RMB101,668,000, recovering from a loss of RMB330,512,000 in the previous year[49]. Research and Development - Total R&D expenses amounted to approximately RMB 707 million, with over 40 R&D projects contributing to revenue growth and cost reduction[13][15]. - The Group's R&D team comprised over 800 members, with more than 60% holding doctoral or master's degrees, and was granted 121 patents during the year[13][15]. - The Group plans to focus on R&D to establish market leadership and align efforts with actual market needs to avoid inefficient innovation[22]. Operational Efficiency - The Group maintained stable operations and reduced costs through effective internal control measures, leading to enhanced market competitiveness[16][18]. - The Group established a data analysis system across all production stages, improving production efficiency and reducing raw material and energy consumption[12][14]. - The Group aims to maintain stable production and improve production efficiency to capitalize on market opportunities in the fluorosilicone chemical industry[23]. - The management will continue to implement strict oversight and cost control to enhance profitability and efficiency[27]. Corporate Strategy - The Group has ceased its real estate business by the end of the review period, with substantial asset disposals reflecting its strategic withdrawal from the sector[17][19]. - The Group's main business is investment holding, with no significant changes in the nature of its operations during the year[102]. - The Group's subsidiaries include Shandong Dongyue Organosilicon Materials Co. Ltd, which is listed on the ChiNext of the Shenzhen Stock Exchange[90]. Shareholder Information - The Board recommended a final dividend of HK$0.10 per share, consistent with the previous year[33]. - The dividend policy aims to maintain adequate cash reserves for operational and capital requirements while enhancing shareholder value[109]. - The AGM is scheduled for 5 June 2025, during which the final dividend will be subject to approval[114]. - The Register will be closed from 2 June 2025 to 5 June 2025 for AGM attendance and voting eligibility[116]. - The Register will also be closed from 12 June 2025 to 16 June 2025 for entitlement to the final dividend[117]. Employee Information - The total number of employees as of December 31, 2024, was 6,922, a decrease from 6,977 in 2023[85]. - The Group's remuneration policy is based on performance, ensuring competitiveness in employee compensation[85]. Financial Position - The Group's total equity as of December 31, 2024, amounted to RMB17,471,837,000, up 3.15% from the previous year[69]. - The Group generated a net cash inflow of RMB2,071,697,000 from operating activities, significantly higher than RMB1,375,950,000 in the previous year[69]. - Capital expenditure for the year was approximately RMB1,800,565,000, mainly for the renovation of existing production lines and construction of ancillary facilities[68]. - As of December 31, 2024, the Group had no borrowing balance, maintaining a negative gearing ratio of -14.14%, indicating a net cash position[76]. - The Group's cash and equivalents exceeded its debt, which is generally viewed as a positive financial signal[76]. Governance and Management - Mr. Wang Weidong has over 30 years of experience in the chemical industry and is responsible for technology R&D and corporate management[90]. - Mr. Zhang Zhefeng has more than 20 years of experience in accounting and finance, currently serving as the CFO[91]. - Ms. Chung Tak Lai, appointed in March 2024, has over 20 years of experience in accounting, corporate finance, compliance, and strategic investment[93]. - The Group's executive directors have extensive backgrounds in finance, management, and compliance, contributing to the overall governance and strategic direction of the Company[92]. Legal and Compliance - The continuing connected transactions have been reviewed by the auditors, confirming compliance with relevant regulations[194]. - Independent Non-Executive Directors confirmed that the continuing connected transactions were conducted in the ordinary course of business and on terms no less favorable than those available to independent third parties[187].

Summary of Dongyue Group Conference Call Company Overview - Dongyue Group operates in the refrigerants, fluoropolymer, and silicone industries, with a balanced business structure. The company benefits from rising refrigerant prices and quota advantages, leading to increased profit contributions from refrigerants [2][4]. Key Points Industry Dynamics - The refrigerant sector is entering a new growth cycle with the implementation of the third-generation refrigerant quota system in 2024, which is expected to drive stock price increases [2][5]. - The second-generation refrigerant R22 has seen significant price increases due to maintenance demand and quota restrictions, with Dongyue holding a 29.5% share of the R22 quota [2][8]. - The third-generation refrigerant R32 is widely used in household air conditioning, with prices continuing to rise, reflecting a significant price difference compared to R22 [2][9]. - The fluoropolymer market, particularly PTFE and PVDF, is experiencing shifts due to emerging demands from AI servers and other high-end applications, with Dongyue positioning itself in this segment [2][12][13]. Financial Performance - Dongyue Group's projected net profits for 2024, 2025, and 2026 are estimated at 800 million, 2.2 billion, and 3 billion CNY, respectively, with a price-to-earnings (PE) ratio of 7-8 times, suggesting a reasonable stock price range of 10-10.8 HKD [3][18]. - The company has a healthy financial status, with a balanced revenue structure and leading profit margins in the industry. The gross and net profit margins are above industry averages, supported by excellent cost control and leading refrigerant quotas [17]. Shareholder Structure - The current shareholder structure is primarily composed of individual shareholders, with Chairman Zhang holding 15% of the shares. The company has reduced the impact of the debt crisis from its former major shareholder, Xinhua Group, by repurchasing shares [2][6]. Market Trends - The refrigerant industry is categorized into four generations, with the first generation banned globally due to ozone depletion. The second and third generations are still in use but are subject to production quotas aimed at reducing environmental impact [7]. - The fluoropolymer sector is experiencing a transition, with PTFE production capacity growing steadily, while high-end products remain reliant on imports [10][11]. Future Outlook - Dongyue Group is focusing on high-end applications in the fluoropolymer market to differentiate itself amid a competitive landscape. The company is also expanding its presence in the proton exchange membrane market, which is expected to grow rapidly with the development of green hydrogen [16]. - The organic silicon sector is projected to maintain double-digit growth, driven by emerging demands, with Dongyue's subsidiary contributing significantly to this segment [14][15]. Additional Insights - The PVDF market has seen dramatic price fluctuations due to rapid demand growth from the new energy sector, with prices peaking at 500,000 CNY per ton before stabilizing around 55,000 CNY per ton [13]. - The company is well-positioned to capitalize on the anticipated recovery in prices and profits across its various business segments, indicating a positive long-term growth trajectory [18].

Summary of Conference Call Company and Industry Overview - The conference call discusses a company involved in the chemical and materials industry, particularly focusing on organic silicon and refrigerants, with a notable emphasis on the smart machine segment and real estate business divestiture [1][5][16]. Key Points and Arguments 1. **Product Pricing and Quality**: The company maintains a higher price point for its products due to superior quality and performance metrics, which continues to attract downstream customers despite the price premium [1]. 2. **Cost Management**: The company benefits from integrated operations that lower costs, alongside policies aimed at efficiency improvements, contributing to competitive market positioning [1]. 3. **Sales Growth**: The organic silicon segment reported a sales revenue increase of over 7%, despite price fluctuations in the market [1]. 4. **Performance of By-products**: The sales revenue from by-products, such as 29RMG, saw a significant increase of nearly 50%, indicating strong performance in secondary product lines [2]. 5. **Real Estate Business Exit**: The company has strategically exited its real estate business to mitigate losses, which had a notable impact on the profit statement [5]. 6. **Research and Development Focus**: R&D expenditures decreased to over 700 million, with a strategic shift to focus on high-potential market products, maintaining a commitment to innovation [4]. 7. **Market Conditions**: The company anticipates a better market environment in 2025, with expectations of increased demand for smart machines and organic silicon materials [6][7]. 8. **Production Adjustments**: The company has optimized production structures and adjusted product lines to align with market demand, particularly in the refrigerant segment [8][9]. 9. **Future Product Development**: The company is exploring alternatives to current refrigerants, including the development of fourth-generation refrigerants, despite existing safety and efficiency concerns [14][15]. 10. **Impact of Tariffs**: The company reports minimal impact from U.S. tariffs on exports, as the volume of exports to the U.S. is relatively small [16]. 11. **Organic Silicon Market Dynamics**: The organic silicon industry is recovering from previous overcapacity, with utilization rates improving to around 70-80%, indicating a healthier market outlook [18]. 12. **Challenges in High-Performance Materials**: The company faces challenges in the high-performance materials segment due to competitive pressures and pricing declines, but maintains a focus on essential high-end materials [20]. Other Important but Overlooked Content - The company emphasizes the importance of adhering to safety and environmental standards in production processes, which enhances operational efficiency [4]. - The strategic decision to divest from real estate was framed as a long-term benefit, reducing ongoing liabilities and focusing on core business areas [5]. - The company is cautious about future expansions in production capacity, citing ongoing overcapacity issues in the industry [21]. This summary encapsulates the critical insights from the conference call, highlighting the company's strategic direction, market conditions, and operational adjustments.

Investment Rating - The report maintains an "Outperform" rating for the company [4][7]. Core Views - The company is a leading player in the domestic fluorosilicon industry, benefiting significantly from the rising demand for refrigerants [1][2]. - The company has a comprehensive fluoropolymer industry chain and is continuously expanding its high-end product offerings [3]. - The organic silicon supply landscape is improving, with sustained demand growth expected [3]. Summary by Sections Company Overview - Established in 1987, the company has become a leader in China's fluorosilicon industry, with major revenue sources from refrigerants, fluoropolymers, and organic silicon materials [1][16]. - The company has a total refrigerant production quota of 129,900 tons for 2025, leading the domestic market [1][2]. Refrigerant Business - The company is the largest producer of R22 and R32 in China, holding significant production capacities and quotas [2]. - The average price of the company's refrigerant products is projected to increase, leading to substantial profit growth [2]. Fluoropolymer Business - The company has a strong position in the fluoropolymer market, with a focus on high-end products driven by emerging demands [3]. - The company is expected to benefit from the recovery of profit margins in the organic silicon industry [3]. Financial Forecast and Valuation - The company is projected to achieve net profits of 811 million, 2.177 billion, and 2.953 billion yuan for 2024, 2025, and 2026 respectively, with significant growth rates [4][8]. - The reasonable valuation range for the company's stock is estimated to be between 9.51 and 10.86 HKD [4].

Investment Rating - The report maintains an "Outperform" rating for Dongyue Group [2][10]. Core Views - In 2024, the profit attributable to owners increased by 14.55%, while revenue decreased by 2.15% to RMB 14.181 billion. The gross profit margin improved by 4.81 percentage points to 21.62% [6][10]. - The company has completed the disposal of its real estate business assets, marking the end of its involvement in this sector since 2011 [9]. - The fluorine-silicon chemical industry faced significant external market impacts, leading to price adjustments for key products like refrigerants R22 and R32, which contributed to the company's performance improvement [6][10]. Business Segment Summary - **Fluorine-containing Polymer Materials**: External sales were approximately RMB 3.825 billion, a year-on-year decrease of 15.98%, accounting for 26.97% of total sales, with segment profit increasing by 50.87% to RMB 508 million [7]. - **Refrigerants**: External sales reached about RMB 3.248 billion, up 13.10% year-on-year, representing 22.90% of total sales, with segment profit soaring by 159.63% to RMB 806 million [7]. - **Silicones**: External sales were approximately RMB 5.213 billion, a year-on-year increase of 7.20%, accounting for 36.76% of total sales, with a segment profit turnaround to RMB 102 million [7]. - **Methylene Chloride and Caustic Soda**: External sales were about RMB 1.104 billion, down 6.16% year-on-year, accounting for 7.79% of total sales, with segment profit increasing by 49.85% to RMB 372 million [7]. Quota and Market Position - Dongyue Group holds the largest second-generation refrigerant quota in the country, with a total production quota of 44,600 tonnes for 2025, representing 27.26% of the industry [8]. - The company also has a production quota of 86,100 tonnes for third-generation refrigerants in 2025, reflecting a 5.70% increase from the previous year [8]. Profit Forecast - The forecast for net profit from 2025 to 2027 is RMB 1.800 billion, RMB 2.109 billion, and RMB 2.531 billion respectively, with a target price set at HKD 12.00 based on a PE ratio of 10.62 for 2025 [10].

Summary of the Conference Call for Dongyue Group Industry Overview - The conference call primarily discusses the performance and strategies of Dongyue Group in the refrigerant and fluoropolymer materials industry, as well as its organic silicon segment and real estate business. Key Points and Arguments 1. Overall Performance in 2024 - Dongyue Group adopted a cautious and diversified operational strategy amid a less optimistic economic environment, achieving notable performance growth. The refrigerant segment showed the best performance with a revenue increase of 13%, and some performance metrics surged by 160%, primarily due to significant price increases for R32 and R22 products [3][4][33]. 2. Refrigerant Segment - The refrigerant business experienced a 13% revenue growth, with some performance metrics increasing by 160%. This was mainly attributed to the price hikes of R32 and R22 due to quota regulations. The company quickly adjusted its product structure and optimized market allocation to enhance competitiveness [4][34]. 3. Fluoropolymer Materials Segment - The fluoropolymer materials segment saw a 16% decline in external sales revenue, but segment performance increased by over 50%. This was due to product price advantages and cost control measures, as well as targeted marketing in high-end application areas [4][5][35]. 4. Organic Silicon Segment - The organic silicon segment turned from a loss in 2023 to profitability in 2024, with a slight increase in external sales revenue. This turnaround was attributed to adjustments in sales strategy and improvements in production efficiency [6][35]. 5. Real Estate Business Impact - The real estate business negatively impacted overall profits in 2024 due to asset disposals, leading to significant declines in other business segments and resulting in depreciation and tax issues. The company has been gradually exiting the real estate sector since 2020, with most remaining assets processed by the end of 2024 [7][38]. 6. Research and Development Focus - The company is focusing on market-oriented projects, optimizing R&D investments despite a decrease in R&D spending. The emphasis is on high-end applications such as high-end PTFE and PVDF to meet future market demands [8][10][28][37]. 7. Cost Control and Efficiency Measures - Dongyue Group will continue to implement cost reduction and efficiency enhancement policies, including expense management and cross-training in key departments to improve professionalism and inject new vitality into the company [8][42]. 8. Future Development Strategies - Looking ahead, the company plans to continue executing established policies and actively seize market opportunities. In the refrigerant sector, it will closely follow market price trends, while in fluoropolymer and organic silicon materials, it anticipates a recovery and aims to enhance competitiveness [9][39]. 9. Production Capacity and New Projects - The company is constructing a new 60,000-ton R32 facility in two phases, with the first phase of 11,000 tons expected to be completed before the peak season to address supply shortages. The polyurethane project is also expected to be launched in April and May [4][25][55]. 10. Market Conditions and Price Trends - The market conditions for refrigerants, particularly R22, are expected to fluctuate based on seasonal demand, with current prices remaining stable compared to earlier months. The company anticipates increased sales in the second quarter [17][49]. 11. Talent Management Adjustments - The company has implemented job rotation training in key departments to enhance the professionalism and capabilities of its workforce, contributing to the company's growth [11][42]. 12. Future Dividend Plans - Future dividend distributions will be determined based on the company's operational performance, with no specific plans currently in place [21][60]. 13. Inventory Levels - The company does not currently face concerns regarding inventory levels for R22, as the stock is not at levels that would raise alarms following quota reductions [22][53]. 14. Export and Domestic Demand - Domestic demand showed improvement in March after a slow start to the year, while export data quality remains uncertain due to potential licensing issues [23][54]. 15. PTFE Applications - PTFE is widely used in high-end applications, including electronics and new energy sectors, with the company performing well in the domestic market and seeking further development opportunities [18][50]. Conclusion - Dongyue Group's strategic focus on optimizing product offerings, enhancing operational efficiency, and navigating market challenges positions it well for future growth in the refrigerant and fluoropolymer materials sectors, despite the challenges posed by its real estate business.

Core Viewpoint - Dongyue Group reported a revenue of RMB 14.181 billion for the year ending December 31, 2024, a decrease of 2.15% year-on-year, while net profit attributable to shareholders increased by 14.55% to RMB 0.811 billion, with earnings per share at RMB 0.46 and a proposed final dividend of HKD 0.1 per share [1] Group Performance - The fluorosilicone chemical industry faced significant external environmental changes, leading to product price adjustments. The refrigerant segment saw substantial price increases for key products like R22 and R32 due to quota restrictions, prompting the company to optimize product structure and market allocation, contributing to performance growth and laying a solid foundation for future industry layout [1] - The organic silicon segment turned profitable due to effective cost management and strong market expansion capabilities amid supply-demand imbalances in the industry [1] - The fluoropolymer materials segment maintained a competitive edge through high product quality and a focus on high-end products, achieving stable performance despite intensified market competition and declining product prices [1] Operational Efficiency - In a competitive environment, the company enhanced operational efficiency, resulting in increased production of major products compared to 2023, while reducing raw material consumption, overall energy consumption, and by-product output [2] - A data analysis system was established across production processes to analyze production data, provide guidance, and improve efficiency. The company maintained strict safety and environmental standards, achieving a significant reduction in abnormal shutdown rates and ensuring compliance with wastewater and air emission standards [2] Research and Development - The company placed significant emphasis on independent research and development, with R&D expenses amounting to approximately RMB 707 million for the year. Over 40 projects related to new products, technologies, and energy-saving measures were initiated, contributing significantly to revenue and profit growth [2] - By the end of 2024, the R&D team had grown to over 800 members, with more than 60% holding doctoral or master's degrees. The company received 121 patent authorizations during the year, bringing the total to over 600 patents [2] - The company also published four national standards, four industry standards, and 20 group standards during the review period, further promoting industry development [2]

Financial Performance - Total revenue for the year ended December 31, 2024, was RMB 14,181 million, a decrease of 2.15% from RMB 14,493 million in 2023[4] - Gross profit increased to RMB 3,067 million, representing a gross margin of 21.62%, up from 16.81% in the previous year[4] - Profit before tax rose significantly to RMB 1,423 million, compared to RMB 653 million in 2023, marking a substantial increase[5] - Net profit attributable to equity holders was RMB 811 million, an increase from RMB 708 million in the prior year[4] - Basic earnings per share improved to RMB 0.46, up from RMB 0.32 in 2023[4] - The company reported a total comprehensive income of RMB 1,008 million, up from RMB 596 million in 2023[5] - The company recorded revenue of approximately RMB 14,181,087,000 for the year ending December 31, 2024, a decrease of 2.15% compared to RMB 14,493,323,000 in 2023[58] - The company achieved a net profit of approximately RMB 987,497,000 in 2024, compared to RMB 611,085,000 in 2023, representing a significant increase[58] Equity and Assets - Total equity as of December 31, 2024, reached RMB 17,472 million, compared to RMB 16,938 million in 2023[4] - The company's equity attributable to owners increased from RMB 12,107,060 thousand in 2023 to RMB 14,794,221 thousand in 2024, an increase of about 22.2%[7] - The company's total equity increased from RMB 16,938,409 thousand in 2023 to RMB 17,471,837 thousand in 2024, representing an increase of approximately 3.1%[7] - The net asset value per share increased to RMB 10.00, compared to RMB 7.71 in the previous year[4] - Total assets decreased from RMB 17,388,956 thousand in 2023 to RMB 17,997,192 thousand in 2024, representing a decline of approximately 3.5%[6] Liabilities - Total liabilities decreased from RMB 4,559,789 thousand in 2023 to RMB 2,939,678 thousand in 2024, a reduction of about 35.5%[7] - Current liabilities decreased significantly from RMB 4,500,284 thousand in 2023 to RMB 2,822,668 thousand in 2024, a decline of approximately 37.2%[7] Revenue by Segment - Revenue from high polymer materials was RMB 3,824,967 in 2024, down from RMB 4,552,407 in 2023, representing a decline of 16%[13] - Revenue from refrigerants increased to RMB 3,247,702 in 2024, compared to RMB 2,871,580 in 2023, marking an increase of 13.1%[13] - Revenue from organic silicon products was RMB 5,212,703 in 2024, a slight increase from RMB 4,862,426 in 2023, reflecting a growth of 7.2%[13] - The high polymer materials segment reported external sales of RMB 3,824,967,000, a decrease of 15.98% from RMB 4,552,407,000 in 2023, but the segment's profit increased by 50.87% to RMB 508,088,000[61] - The refrigerant segment's external sales increased by 13.10% to RMB 3,247,702,000, with profits soaring by 159.63% to RMB 806,356,000[63] - The organic silicon division's external sales increased by 7.20% to RMB 5,212,703,000, accounting for 36.76% of the group's total external sales[65] Research and Development - Research and development expenses decreased to RMB 707 million from RMB 935 million, indicating a focus on cost management[5] - Research and development costs amounted to approximately RMB 707 million, with over 40 new projects contributing to revenue and profit growth[50] - The group obtained 121 patent grants during the year, bringing the total number of patents to over 600 by year-end[50] Dividends - The company declared a final dividend of HKD 0.10 per share, consistent with the previous year[4] - The proposed final dividend for 2024 is RMB 160,456,029, maintaining the same dividend per share of HKD 0.10 as in 2023[31] - The board of directors proposed a final dividend of HKD 0.10 per share for shareholders listed on June 16, 2025[58] Cost Management - Distribution and selling expenses decreased by 13.09% to RMB 437,188,000 due to reduced operational costs[70] - Administrative expenses increased by 13.53% to RMB 734,857,000, primarily due to increased asset impairment provisions[71] - Cost control measures have led to a reduction in procurement, engineering, maintenance, and transportation costs, enhancing market competitiveness[51] - The group has strengthened management practices to ensure ongoing cost reduction and efficiency improvements[56] Investments - The group has made an additional investment of RMB 15,648,000 in Zibo Runxin during the year ending December 31, 2023[39] - The group's total investment in Taihe is RMB 600,000,000, representing 6% of Taihe's registered capital of RMB 10,000,000,000[34] Employee Information - As of December 31, 2024, the group employed 6,922 employees, a slight decrease from 6,977 in 2023[82] - The total employee costs for 2024 amounted to RMB 1,054,873,000, a decrease from RMB 1,345,678,000 in 2023, representing a reduction of approximately 21.5%[28] Market Conditions - The market for refrigerants, including key products like R22 and R32, saw significant price increases due to quota restrictions, positively impacting the company's performance[48] - The company’s management noted that the fluorosilicone industry faced significant changes due to external economic factors, affecting product pricing and market conditions[47] Miscellaneous - The company has not identified any significant impact from the newly issued international financial reporting standards on its operational performance and financial position[11] - The company will not buy, sell, or redeem any listed securities for the fiscal year ending December 31, 2024[90] - The audit committee will review the financial reporting and internal controls for the fiscal year ending December 31, 2024, on March 24, 2025[93]

Investment Rating - The report does not provide a specific investment rating for the company [3] Core Insights - Dongyue Group focuses on the domestic chemical new materials market, reducing the impact of overseas policies such as tariffs [1][8] - The company has exited its real estate business to concentrate on its core chemical operations [1][34] - The company has seen significant growth in operating profit, particularly in the refrigerant segment due to quota implementation driving prices up [1][25][27] Summary by Sections Company Overview - Dongyue Group, established in 1987 and listed in Hong Kong since 2007, primarily produces four categories of chemical products: polymer materials, organic silicon, refrigerants, and dichloromethane and caustic soda [1][7] - The company generates 84.8% of its revenue from the domestic market, which mitigates the direct impact of overseas policies [1][8] Financial Performance - For 1H24, the company's operating profit increased by 135.2% year-on-year to 650 million RMB, driven by effective cost management and rising refrigerant prices [1][10] - The revenue for FY23 was 14,493 million RMB, with a growth rate of 26.4% compared to FY22 [5][11] Product Segments - **Refrigerants**: The implementation of production quotas has led to a significant increase in prices, with R32 refrigerant prices reaching 40,000 RMB per ton in December 2024, compared to 13,000 RMB and 18,000 RMB in the same period of 2022 and 2023 respectively [1][25][27] - **Polymer Materials**: The segment has shown a 35.2% increase in operating profit for 1H24, with a profit margin increase of 5 percentage points to 14.9% [13] - **Organic Silicon**: The segment turned profitable in 1H24, recording a profit of 53.68 million RMB due to lower production costs and increased sales [19] - **Dichloromethane and Caustic Soda**: This segment's performance improved by 44.4% in 1H24, attributed to a significant drop in unit costs [33] Market Position and Valuation - The company's FY25 price-to-earnings ratio is projected at 6.3 times, indicating a valuation comparable to its peers in the Hong Kong chemical sector [37]

Investment Rating - The investment rating for Dongyue Group is "Outperform the Market" [1] Core Views - Dongyue Group is a leading enterprise in the fluorosilicone industry, primarily engaged in fluorosilicone chemical business across five segments, including high polymer materials, refrigerants, organic silicon, dichloromethane, PVC, and caustic soda [5][6] - The company experienced a decline in net profit in 2024H1, amounting to 233 million yuan, a year-on-year decrease of 6.70%. The revenue for 2021-2024H1 was 15.847 billion yuan, 20.036 billion yuan, 14.554 billion yuan, and 7.285 billion yuan, reflecting year-on-year changes of +57.48%, +26.43%, -27.36%, and +1.07% respectively [5] - The company benefits from rising refrigerant prices, with R22's market average price increasing by 56.41% since January 29, 2024, and R32's price rising by 126.87% year-on-year [5] Summary by Sections Financial Performance - The company reported a net profit of 708 million yuan in 2023, with projections of 907 million yuan, 1.476 billion yuan, and 2.012 billion yuan for 2024, 2025, and 2026 respectively, indicating a significant recovery in profitability [7][11] - Revenue for 2023 is projected at 14.493 billion yuan, with expected growth to 15.940 billion yuan in 2024, 17.979 billion yuan in 2025, and 20.378 billion yuan in 2026, reflecting a year-on-year growth of 10.0%, 12.8%, and 13.3% [7][11] Market Position and Innovation - The company introduced 101 new product grades in 2023, enhancing its competitive edge and market position. It holds a total of 620 authorized patents and has published 127 various standards [6] - Research and development expenditures were approximately 935 million yuan in 2023, accounting for 6.45% of total revenue [6] Earnings Forecast - The forecasted net profits for 2024-2026 are 907 million yuan, 1.476 billion yuan, and 2.012 billion yuan, with corresponding EPS of 0.52 yuan, 0.85 yuan, and 1.16 yuan [6][11] - The estimated PE ratio for 2024 is between 16-18 times, leading to a reasonable value range of 8.32-9.36 yuan, which translates to 9.04-10.17 HKD based on the exchange rate [6]