Market Overview - The Hang Seng Index fell by 0.21%, down 49 points, closing at 23,857 points, while the Hang Seng Tech Index decreased by 0.59% [1] - The early trading volume in the Hong Kong stock market reached HKD 102.1 billion [1] Sector Performance - The non-ferrous metal sector showed strong performance, with institutions optimistic about sustained profitability; Luoyang Molybdenum Co. rose by 4% and Jiangxi Copper Co. increased by 3.11% [1] - The three major telecom operators in Hong Kong experienced gains, with China Unicom, China Mobile, and China Telecom all rising over 2% [1] Notable Stock Movements - China Silver Group surged over 23%, with spot silver prices reaching nearly USD 36, marking a 13-year high [1] - Longpan Technology saw a rise of 3.35% after signing a large order for 150,000 tons of lithium iron phosphate, indicating a boost in solid-state battery production [1] - Dongyue Group increased by 1.54% as prices for third-generation refrigerants continued to rise, positioning the company as a leader in R22 and R32 quotas [1] - Youjia Innovation rose by 7% after securing a key model for a new energy brand under Changan Automobile [1] - Shijiazhuang Pharmaceutical Group increased by 4.27% after obtaining production registration for calcium gluconate and sodium chloride injection [1] - Zhongxu Future surged over 11% as the issuance of domestic game licenses reached a new high, with multiple new titles planned for release within the year [1] Company-Specific Challenges - Dongfeng Group's stock fell over 3% amid clarification from its controlling shareholder that there are no current restructuring plans, with a reported 17.1% year-on-year decline in vehicle sales for the first five months [2] - Alibaba Health dropped by 3.46% as its profits for the fiscal year 2025 fell short of expectations, with UBS suggesting the company may struggle to maintain its current valuation [3] - The automotive sector faced renewed declines, with analysts predicting an unavoidable new round of price wars, leading to a trend of increased revenue without profit growth; XPeng Motors fell by 2.9% and Li Auto decreased by 1.46% [3]

Group 1 - The third-generation refrigerant R32 has seen a price surge, with the domestic average price exceeding 50,000 yuan per ton, representing a 42% year-on-year increase [2] - As of June 5, the gross profit for R32 reached 35,000 yuan per ton, an increase of over 10,000 yuan per ton compared to the same period last year [2] - Several brokerages are optimistic about the third-generation refrigerant's market cycle, anticipating that leading companies will benefit significantly [2] Group 2 - Dongyue Group (00189) is a leading player in China's fluorosilicon industry, holding the fourth domestic quota for HFCs and the first for R22 [3] - The company has integrated advantages across its two main industrial chains: fluorochemical (hydrofluoric acid, refrigerants, and fluorinated polymers) and silicon chemical (monomers, intermediates, and deep-processing products) [3]

Group 1 - The core viewpoint of the news is that the China Securities Hong Kong Stock Connect Repurchase Index has shown significant growth, with a 7.47% increase over the past month, a 6.64% increase over the past three months, and a 16.06% increase year-to-date [1] - The index consists of 50 listed companies with high repurchase ratios within the Hong Kong Stock Connect range, reflecting the overall performance of these companies [1] - The index was established with a base date of December 28, 2018, and a base point of 1000.0 [1] Group 2 - The top ten holdings of the index include HSBC Holdings (10.68%), AIA Group (10.64%), Tencent Holdings (9.81%), Meituan-W (7.89%), Kuaishou-W (7.46%), Dongyue Group (5.98%), CSPC Pharmaceutical Group (5.17%), Hang Seng Bank (5.14%), Swire Pacific A (4.99%), and COSCO Shipping Holdings (3.59%) [1] - The index's holdings are entirely composed of companies listed on the Hong Kong Stock Exchange, with a 100% representation [1] Group 3 - In terms of industry distribution, the index sample shows that finance accounts for 26.46%, communication services for 17.84%, consumer discretionary for 14.80%, healthcare for 13.53%, real estate for 8.29%, industrials for 6.27%, materials for 6.13%, energy for 3.31%, information technology for 1.93%, and consumer staples for 1.44% [2] - The index sample is adjusted quarterly, with adjustments occurring on the next trading day after the second Friday of March, June, September, and December each year [2] - In special circumstances, the index may undergo temporary adjustments, such as when a sample company is delisted or undergoes mergers, acquisitions, or spin-offs [2]

Core Viewpoint - Goldman Sachs economists predict that the RMB/USD exchange rate will reach 7.20, 7.10, and 7.00 in three, six, and twelve months respectively, indicating a potential appreciation of 3% over the next twelve months [1] Group 1: Companies Likely to Benefit from RMB Appreciation - The list of Hong Kong-listed companies that may benefit from RMB appreciation includes: GDS Holdings Limited (09698), Zijin Mining Group (02899), China Jinmao Holdings Group (00817), Dongyue Group (00189), China Southern Airlines (01055), Baidu Group (09888), China Feihe (06186), and Tencent Holdings (00700) [1] - Criteria for selection include: 1) Market capitalization over $2 billion and average daily trading volume (ADVT) exceeding $5 million 2) Industries reliant on USD imports, such as aviation, petrochemicals, construction, staple foods, and tourism, or having over 20% of debt in USD 3) Overseas revenue exposure below 30% 4) No foreign exchange gains during the RMB depreciation period in 2024 5) Low correlation of returns with exchange rate fluctuations [1] Group 2: Companies Likely to Underperform in RMB Appreciation - The list of Hong Kong-listed companies that may underperform during RMB appreciation includes: Haier Smart Home (06690), PetroChina Company Limited (00857), WuXi AppTec (03933), ASMPT Limited (00522), Yue Yuen Industrial Holdings (00551), Sinotruk (Hong Kong) Limited (03808), Shenzhou International Group Holdings Limited (02313), and Minth Group Limited (00425) [2] - Criteria for selection include: 1) Market capitalization over $2 billion and average daily trading volume exceeding $5 million 2) Overseas revenue exposure exceeding 30% 3) USD debt level below 5% 4) No foreign exchange losses during the RMB depreciation period in 2024 5) High correlation of returns with exchange rate fluctuations [2]

Core Viewpoint - The 9th China (Zibo) Chemical Technology Equipment Exhibition aims to leverage Zibo's strong chemical industry base to promote high-quality development and innovation in the sector [3][4]. Industry Overview - Zibo has 482 chemical enterprises with an industrial scale of 374.29 billion, accounting for nearly one-seventh of Shandong province's total [3]. - The city has developed three major industry segments: petrochemicals, fine chemicals, and new chemical materials, along with four key industrial chains including polyolefins and polyurethane [3]. Exhibition Details - The exhibition will cover an area of 80,000 square meters and attract over 1,200 domestic and international enterprises, marking a new high in scale and influence [3]. - The event will feature a forum on "Industrial Internet + AI Technology Empowering Chemical Industry Development," focusing on AI applications and digital transformation paths for the chemical sector [3][4]. Operational Model - The exhibition adopts a collaborative model of "government guidance + association hosting + enterprise undertaking," with a focus on market-oriented operations [4]. - A targeted invitation strategy was employed, reaching out to over 30 chemical parks and 200 industry leaders to ensure effective participation [4]. Innovation and Sustainability - The exhibition emphasizes precision and professionalism, with a scientific layout of exhibition areas based on chemical equipment subfields and supply chain systems [4]. - Local enterprises like Heda Group and Dongyue Group will showcase cutting-edge products, highlighting the strength and innovation of Shandong's high-end chemical industry cluster [5]. Future Goals - The Shandong High-end Chemical Industry Development Promotion Association aims to transform the exhibition into a key hub connecting policies, technologies, and markets, fostering efficient circulation and deep integration of various elements [5].

Investment Rating - The report indicates a positive outlook for the chemical industry, suggesting a new cycle may begin due to improved domestic supply and demand, increased global market share, and declining crude oil prices [3][4]. Core Viewpoints - The chemical industry is expected to enter a new cycle driven by domestic supply-demand improvements and global market share growth, despite potential short-term impacts from overseas demand [3][5]. - The report highlights that the supply side is gradually improving due to reduced fixed asset investment growth and government policies aimed at curbing excessive competition [5][10]. - On the demand side, domestic consumption is anticipated to recover steadily, supported by government initiatives to boost consumption and stabilize the economy [26][33]. - Cost factors are favorable, with significant declines in international crude oil and domestic coal prices, which will support the profitability of chemical products [42][49]. - The report recommends specific companies within various segments of the chemical industry, including refrigerants, amino acids, military and new materials, and fertilizers, indicating potential investment opportunities [5][57]. Summary by Sections Supply Side - The report notes that the chemical industry has faced profitability pressures since 2022, but the current production cycle is nearing its end, which may lead to gradual improvement in profitability as capacity is digested [11][12]. - China's global market share in chemical products has been steadily increasing, with 2023 figures showing a 43.1% share of global sales [25][20]. Demand Side - The report emphasizes that domestic demand is expected to recover, aided by government policies aimed at stimulating consumption and investment [26][33]. - The real estate sector shows signs of stabilization, which could further support demand for chemical products [33]. Cost Side - The report highlights a significant decline in crude oil prices, with Brent crude falling by 14.71% since the beginning of 2025, which is expected to positively impact the cost structure of the chemical industry [42][38]. - Domestic coal and natural gas prices have also shown a downward trend, enhancing the cost competitiveness of chemical products [49][47]. Valuation - The report indicates that the valuation of the basic chemical and petrochemical sectors is at historical lows, suggesting substantial room for recovery as market conditions improve [54][50].

Group 1 - The core viewpoint is that the refrigerant industry is experiencing a price uptrend due to supply constraints and increasing demand driven by seasonal factors and government policies [1][2] - In Q2, the price of R32 long-term contracts rose to 46,600 yuan/ton, an increase of approximately 6,000 yuan/ton compared to the previous quarter [1] - The demand for refrigerants is expected to grow significantly due to government subsidy policies, restocking in Europe and the US, and increasing demand from emerging regions in Southeast Asia [1] Group 2 - The second-generation refrigerants, such as R22, are expected to face a supply-demand gap by 2025 due to rapid supply contraction and support from the air conditioning repair market [1] - The third-generation refrigerant R32 is projected to maintain a tight supply-demand balance in 2025, despite a slight year-on-year increase in supply [1] - The refrigerant industry is characterized by high concentration, with major players showing a strong determination to maintain prices amid low inventory levels [1][2] Group 3 - Dongyue Group (00189) is a leading player in China's fluorosilicon industry, holding the fourth-largest HFCs quota and the largest R22 quota domestically [3] - The company benefits from integrated advantages across both fluorochemical and silicon chemical industries [3]

Investment Rating - The investment rating for Dongyue Group is "Outperform the Market" [5][30][31] Core Views - The refrigerant market is experiencing an upward trend, leading to continuous improvement in the company's performance. In 2024, the company achieved a net profit attributable to shareholders of 811 million yuan, a year-on-year increase of 14.6% [8][30] - The company is a leading producer of R22 and R32 refrigerants in China, with significant production capacity and quotas, which positions it well to benefit from rising refrigerant prices [2][19] - The fluoropolymer segment has a complete industrial chain and cost advantages, contributing to profit growth despite a decrease in revenue [3][23] - The organic silicon segment is seeing improved supply-demand dynamics, with increased sales volume offsetting price declines [4][24] Summary by Sections Financial Performance - In 2024, Dongyue Group reported revenue of 14.181 billion yuan, a decrease of 2.2% year-on-year, while net profit reached 811 million yuan, up 14.6% [8][30] - The gross profit margin was 21.62%, an increase of 4.81 percentage points year-on-year, and the net profit margin was 6.96%, up 2.76 percentage points [8][30] Refrigerant Segment - The refrigerant segment generated revenue of 3.248 billion yuan in 2024, a year-on-year increase of 13.1%, with profits soaring by 159.6% to 806 million yuan [2][19] - The company holds approximately 22,000 tons of R22 production capacity and 6,000 tons of R32 capacity, with significant market share in quotas [2][19] Fluoropolymer Segment - The fluoropolymer segment achieved revenue of 3.825 billion yuan in 2024, a decrease of 16.0%, but profits increased by 50.9% to 508 million yuan [3][23] - The company benefits from a complete industrial chain and cost advantages, positioning it for high-end market breakthroughs [3][23] Organic Silicon Segment - The organic silicon segment reported revenue of 5.213 billion yuan in 2024, a year-on-year increase of 7.2%, with profits turning positive at 102 million yuan [4][24] - Despite price declines, the increase in sales volume has led to improved financial performance [4][24] Future Outlook - The company is expected to maintain a long-term growth trajectory in the refrigerant market, with forecasts for net profits of 2.177 billion yuan in 2025 and 2.953 billion yuan in 2026 [30][31] - The EPS is projected to be 1.26 yuan in 2025 and 1.70 yuan in 2026, reflecting strong growth potential [30][31]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 10.00 [7][8] Core Views - The company reported a revenue of RMB 14.18 billion for 2024, a decrease of 2.2% year-on-year, while the net profit attributable to the parent company was RMB 0.81 billion, an increase of 14.6% year-on-year [1] - The profitability of refrigerants is expected to continue improving, leading to a positive outlook for the company [1][4] - The company’s net profit for 2024 was below expectations due to significant losses from the disposal of real estate business [1] Revenue and Profitability Analysis - The revenue from the polymer materials segment decreased by 16% to RMB 3.83 billion, while the gross profit increased by 51% to RMB 0.51 billion due to cost control measures [2] - The organic silicon segment saw a revenue increase of 7.3% to RMB 5.21 billion, with gross profit turning positive at RMB 0.10 billion [2] - The refrigerant segment benefited from supply-demand dynamics, with revenue increasing by 13% to RMB 3.25 billion and gross profit rising by 160% to RMB 0.81 billion [2] - The overall gross margin improved by 4.8 percentage points to 21.6%, while the expense ratio decreased by 1.1 percentage points to 13.3% [2] Price Trends and Market Conditions - As of April 23, 2024, the prices for refrigerants R22, R32, R125, and R134a increased by 9%, 13%, 7%, and 11% respectively since the beginning of the year, indicating a tight supply and sustained demand from downstream sectors [3] - Prices for PTFE and PVDF materials showed slight increases, while some organic silicon products experienced minor declines [3] Profit Forecast and Valuation - The profit forecast for the company has been slightly adjusted upwards, with expected net profits of RMB 1.62 billion, RMB 2.10 billion, and RMB 2.37 billion for 2025, 2026, and 2027 respectively [4] - The report assigns a price-to-earnings ratio of 10x for 2025, reflecting a discount compared to comparable companies, leading to a target price of HKD 10.00 [4]

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].