Investment Rating - The industry investment rating is "Outperform the Market - A" [5] Core Insights - The construction activity is accelerating, with significant infrastructure investment plans being deployed across multiple provinces, including a target of 90 billion yuan for comprehensive transportation fixed asset investment in Xinjiang for 2026 [16][17] - In January and February 2026, national transportation fixed asset investment reached 355.8 billion yuan, maintaining a high level, with railways and highways receiving substantial funding [2][17] - The coal chemical industry is expected to see increased investment due to its strategic importance in national energy security, especially following the rise in international oil prices due to geopolitical tensions [9][13] - The semiconductor industry is experiencing a new wave of capital expenditure driven by AI demand, which is expected to boost the cleanroom engineering sector [9][10] Summary by Sections Industry Dynamics - The construction sector is witnessing a rapid increase in activity, with various provinces intensifying their annual transportation infrastructure investment plans [16] - Xinjiang aims to complete 90 billion yuan in fixed asset investment and expand its highway network significantly [16] - The cleanroom engineering sector is benefiting from increased demand due to the growth in the semiconductor industry [9][10] Market Performance - The construction industry saw a decline of 0.83%, outperforming the Shanghai and Shenzhen 300 index, which fell by 1.41% [18] - The international engineering and chemical engineering sectors performed better, with respective increases of 2.14% and 1.85% [18] Key Companies to Watch - Recommended companies include China State Construction, China Communications Construction, China Railway Construction, and China Metallurgical Group, which are expected to benefit from low valuations and improving operational metrics [9][11] - In the coal chemical sector, companies like China Chemical, Donghua Technology, and Sinopec Engineering are highlighted for their potential growth [9][13] - In the cleanroom engineering space, companies such as Yaxiang Integration and Shenghui Integration are noted for their strong order growth and profitability [9][11]

行业周报 | 建筑装饰 中央企业产业兴疆座谈会，涉及 1700 亿投资 建筑建材行业周报 20260323-20260327 核心结论 2026 年中央企业产业兴疆工作座谈会在北京举行。3 月 13 日，新疆维吾尔 自治区和新疆生产建设兵团与国务院国资委在北京举行 2026 年中央企业产 业兴疆工作座谈会。座谈会前，自治区和兵团同 18 家中央企业签署了合作 协议，涉及 92 个项目，涉及能源、矿产、算力、装备制造等领域，预计在 疆完成产业投资约 1700 亿元（2025 年中央企业产业兴疆重点项目投资推进 会上，涉及项目 54 个，预计在疆完成产业投资超 1300 亿元）。根据中国新 闻网，中国是全球最大的原油进口国，其中相当一部分要经过霍尔木兹海峡。 这条海上通道一旦受到冲击，对国内能源供应势必会产生不小的影响。而新 疆，恰好是破解这道难题的关键。新疆的太阳能技术可开发量全国第一，风 能资源全国第二。石油能做的，新疆的煤也能做。煤炭是化工原料之母。作 为新疆"十大产业集群"之一的煤炭清洁高效利用产业集群，近两年发展势 头正劲，一批煤制烯烃、煤制油、煤制甲醇、煤制三聚氰胺、煤制聚甲醛等 煤化工项目正加快推进 ...

Group 1: Alibaba (9988.HK) - The report predicts Alibaba's revenue for FY2026-2028 to be CNY 10,377.3 billion, CNY 11,853.8 billion, and CNY 13,308.6 billion, with year-on-year growth of +4.2%, +14.2%, and +12.3% respectively [6] - The company's net profit for the same period is expected to be CNY 977.5 billion, CNY 1,225.1 billion, and CNY 1,444.8 billion, with year-on-year changes of -24.5%, +25.3%, and +17.9% respectively [6] - Alibaba's new organizational structure enhances synergy by integrating long-distance e-commerce and local consumption, while AI and cloud services are expected to drive growth [8][7] Group 2: Bank of China Hong Kong (2388.HK) - Bank of China Hong Kong is positioned as a regional financial flagship with advantages in group platform, brand, and cross-border business, maintaining a leading ROE in the industry [9][10] - The bank's net interest margin is expected to remain stable, supported by a prudent asset quality strategy, and it aims to expand into the ASEAN market as a second growth driver [9] - The target price is set at HKD 47.46 per share, indicating a potential upside of 15% from the current price [9] Group 3: Western Mining (601168.SH) - Western Mining's subsidiary, Tibet Yulong Copper Industry, has reported a significant increase in copper resources, adding 131,420 tons of copper metal resources compared to 2018 [13] - The company is transitioning from a "cyclical resource stock" to a "growth resource stock," with plans for expansion and increased production capacity [14] - The expected net profit for 2024 is CNY 54.11 billion, with the Yulong Copper Mine contributing significantly to the overall profit [13] Group 4: Fuyao Glass (600660.SH) - Fuyao Glass achieved a revenue of CNY 457.9 billion in 2025, representing a year-on-year increase of 16.7%, with a net profit of CNY 93.1 billion, up 24.2% [16] - The company is expected to see revenue growth of CNY 525 billion, CNY 600 billion, and CNY 673 billion for 2026-2028, with net profits of CNY 106 billion, CNY 123 billion, and CNY 141 billion respectively [18] - The shift towards electric and intelligent vehicles is driving demand for high-value glass products, enhancing the company's market position [18] Group 5: Sinopec Engineering (02386.HK) - Sinopec Engineering reported a revenue of CNY 700.74 billion for 2025, with a year-on-year growth of 9.15%, although net profit decreased by 27.09% [20] - The company has a strong order backlog, with uncompleted orders amounting to CNY 2,038.50 billion, which is 2.9 times its 2025 revenue [20] - The company plans to maintain a high dividend policy, with a total dividend payout of CNY 0.358 per share for the year [22]

Group 1 - The ongoing escalation of the Middle East situation, particularly the conflict involving Israel and Iran, is injecting significant uncertainty into global capital markets and disrupting global prices [1] - BASF announced price increases for all products in its home care, industrial and institutional cleaning, and industrial formulation business in Europe, with increases of up to 30% for some selected products [1] - The price hikes are primarily in response to severe fluctuations in key raw material prices and supply, along with rising logistics, packaging, and energy costs [1] Group 2 - The German Chemical Industry Association (VCI) issued a warning indicating that the Iran conflict and potential closure of the Strait of Hormuz could severely impact the chemical industry, raising concerns about supply bottlenecks for ammonia, phosphate, helium, and sulfur [2] - Rising international oil prices due to geopolitical tensions may make coal chemical products a significant factor in domestic coal price transmission, especially as the Middle East is a major source of methanol imports for China [2] - Domestic chemical products maintain a global cost advantage, and with the exit of high-energy-consuming facilities in Europe and North America, along with economic growth in Asia, Africa, and Latin America, bulk chemical products are expected to see an upturn in demand by 2026 [2] Group 3 - The global energy landscape is undergoing deep adjustments, highlighting the importance of modern coal chemical technology in ensuring energy and supply chain security for China [3] - By 2025, the proportion of chemical oil consumption in China is projected to be around 24%, while coal for chemical use is expected to be about 8% [3] - China's modern coal chemical technology and scale are globally leading, with potential for high-quality exports to countries along the Belt and Road Initiative [3] Group 4 - Sinopec (00386) is constructing a globally leading refining and intelligent refining base, with a terminal network covering 30,000 gas stations and over 28,000 convenience stores [4] - Sinopec Oilfield Services (01033) is a leading integrated oil service enterprise in China, actively expanding its overseas market business [4] - Sinopec Refining and Chemical Engineering (02386) reported a 2% year-on-year increase in new contracts signed domestically, with overseas contracts accounting for 38% of total new contracts [4] Group 5 - Shanghai Petrochemical (00338) is a major integrated refining and chemical enterprise in China and the first company listed in Shanghai, Hong Kong, and New York [5] - The main business includes processing crude oil to produce synthetic fibers, resins, plastics, intermediate petrochemical products, and finished oil products [5]

Group 1 - BASF announced price increases for all products in its home care, industrial and institutional cleaning, and industrial formulation business in Europe, with increases up to 30% for some selected products, effective immediately [1] - The price hikes are attributed to significant fluctuations in key raw material prices and supply, along with rising logistics, packaging, and energy costs [1] - The German Chemical Industry Association (VCI) warned that the ongoing conflict in Iran and potential closure of the Strait of Hormuz could severely impact the chemical industry, raising concerns about supply bottlenecks for ammonia, phosphate fertilizers, helium, and sulfur [2] Group 2 - Domestic chemical products maintain a global cost advantage, and with the exit of high-energy-consuming facilities in Europe and North America, along with economic growth in Asia, Africa, and Latin America, bulk chemical products are expected to see an upturn in 2026 [2] - The current global energy landscape is undergoing significant adjustments, highlighting the importance of modern coal chemical technology in China, which is expected to lead to high-quality overseas expansion [3] - China Petroleum & Chemical Corporation (Sinopec) is constructing a leading global refining and intelligent refining base, with a network covering 30,000 gas stations and over 28,000 convenience stores, supporting high-quality development in the midstream sector [4] - Sinopec Oilfield Service is actively expanding its overseas market business, leveraging group resources for investments and services in oil and gas resources, refining, and chemical products [4] - Shanghai Petrochemical Company, a subsidiary of Sinopec, is a major integrated refining and chemical enterprise in China, producing synthetic fibers, resins, plastics, and petrochemical products [5]

Investment Rating - The report maintains a "Buy" rating for Sinopec Engineering (02386.HK) [4][3] Core Views - In 2025, the company achieved a revenue of 70.074 billion yuan, a year-on-year increase of 9.15%, while gross profit was 5.177 billion yuan, down 2.98%, and net profit attributable to shareholders was 1.798 billion yuan, down 27.09% [1][4] - The company experienced significant growth in engineering contracting and overseas revenue, with a robust order backlog [1] - The gross margin decreased to 7.39%, primarily due to the impact of certain construction projects, while the net profit margin fell to 2.58% [2] Financial Summary - Revenue by business segment in 2025: Design consulting and technology licensing (3.95 billion yuan, -5.1%), Engineering general contracting (46.21 billion yuan, +21.6%), Construction (24.58 billion yuan, -9.9%), Equipment manufacturing (0.73 billion yuan, -1.6%) [1] - Revenue by industry: Refining (11.94 billion yuan, +3.9%), Petrochemical (44.70 billion yuan, +11.0%), New coal chemical (4.41 billion yuan, +308.8%), Storage and transportation (9.03 billion yuan, -20.6%) [1] - Revenue by region: China (51.57 billion yuan, -3.5%), Overseas (18.50 billion yuan, +71.9%) [1] - Revenue from internal and external clients: Internal (25.20 billion yuan, +4.0%), External (44.87 billion yuan, +12.3%) [1] - New orders signed in 2025 amounted to 101.248 billion yuan, a year-on-year increase of 0.6%, with an uncompleted order backlog of 203.85 billion yuan, 2.9 times the revenue of 2025, up 18.1% year-on-year [1] Profitability and Cash Flow - The company's operating cash flow improved significantly, with a net cash flow of 8.186 billion yuan in 2025, a substantial recovery from a net outflow of 2.211 billion yuan in 2024 [2] - The company plans to distribute a final dividend of 0.104 yuan per share and an additional special dividend of 0.094 yuan per share, maintaining a total dividend of 0.358 yuan per share, with a payout ratio of 87.62%, up 24.12% year-on-year [2]

Investment Rating - The report maintains a "Neutral" rating for Sinopec Engineering (02386) and lowers the target price by 6.25%, from HKD 8 to HKD 7.5 [1] Core Insights - Sinopec Engineering aims to achieve new orders of RMB 90 billion by 2026, with domestic orders at RMB 55 billion and overseas orders at USD 5 billion. This aligns with the view that domestic chemical demand has peaked [1] - For the fiscal year 2025, the company secured new orders of RMB 101 billion, with a record backlog of RMB 204 billion, of which overseas projects contributed 52%. However, the backlog turnover time has extended to 2.7 years, compared to the average of 2 years from 2018 to 2024, indicating prolonged execution cycles for overseas projects and a slowdown in domestic investment [1] - The forecast for the company's net profit after tax for 2026-2027 has been reduced by 3-4% due to the aforementioned factors [1] - The fiscal year 2025 saw a significant year-on-year decline of 27% in net profit after tax, which was much lower than expected, primarily due to a sharp drop in profit margins within the construction industry. Although management indicated that some projects are nearing completion, there is uncertainty regarding the recovery of short-term profit margins [1] - The company's dividend remained flat year-on-year [1]

Investment Rating - The report maintains a "Buy" rating for Sinopec Engineering (2386.HK) [6] Core Insights - In 2025, Sinopec Engineering achieved a total revenue of 70.074 billion CNY, representing a year-on-year increase of 9.15%, while the net profit attributable to shareholders was 1.798 billion CNY, a decrease of 27.09% [1][2] - The decline in net profit is attributed to the underperformance of overseas subcontracting projects, particularly contracts signed in 2020-2021, which negatively impacted the overall gross margin and net profit [2] - The company has seen a steady increase in new contract signings, with domestic new contracts amounting to 63.2 billion CNY, a 2% increase year-on-year, while overseas new contracts totaled 38 billion CNY, a slight decline of 1.3% [3] Financial Performance Summary - Revenue and Profitability: - Revenue for 2025: 70.074 billion CNY, up 9.15% from 2024 - Net profit for 2025: 1.798 billion CNY, down 27.09% from 2024 - Gross margin for 2025: 7.4%, a decrease of 0.9 percentage points year-on-year [2][5] - Contracting Activity: - Domestic new contracts: 63.2 billion CNY, up 2% year-on-year - Overseas new contracts: 38 billion CNY, down 1.3% year-on-year - Internal contracts from Sinopec Group: 55% of new contracts, up 46% year-on-year [3] - Profit Forecast: - Expected net profit for 2026: 2.355 billion CNY (down 15%), for 2027: 2.566 billion CNY (down 12%), and for 2028: 2.831 billion CNY [4][5] Valuation Metrics - Earnings per Share (EPS) forecast: - 2026: 0.54 CNY - 2027: 0.58 CNY - 2028: 0.64 CNY [4][5] - Price-to-Earnings (P/E) ratio: - 2025: 13.3 - 2026: 10.2 - 2027: 9.3 - 2028: 8.5 [5][14]

Investment Rating - The investment rating for Sinopec Engineering (02386.HK) is "Buy" with a current price of HKD 6.23 and a target value of HKD 8.12 [6]. Core Views - The report highlights that the company maintains its special dividend and keeps the total dividend unchanged, reflecting confidence in its financial stability. The expected recovery in profit margins is anticipated as project execution progresses [6][10]. - The company reported a revenue of RMB 70.1 billion for 2025, a year-on-year increase of 9.2%, while the net profit attributable to shareholders decreased by 27.1% to RMB 1.798 billion due to declining gross margins and interest income [6][10]. - The report indicates that the decline in gross margin to 7.4% in 2025 was primarily due to underperformance in two Saudi projects, impacting the construction gross margin significantly [6][10]. Financial Forecast - Revenue projections for the upcoming years are as follows: - 2024: RMB 64.198 billion - 2025: RMB 70.074 billion - 2026: RMB 77.026 billion - 2027: RMB 84.014 billion - 2028: RMB 90.757 billion - The growth rates for these years are projected at 13.9%, 9.2%, 9.9%, 9.1%, and 8.0% respectively [2]. - The expected EBITDA figures are: - 2024: RMB 2.779 billion - 2025: RMB 2.361 billion - 2026: RMB 2.867 billion - 2027: RMB 3.293 billion - 2028: RMB 3.458 billion [2]. - The net profit attributable to shareholders is forecasted to recover to RMB 2.291 billion in 2026, RMB 2.539 billion in 2027, and RMB 2.821 billion in 2028, with growth rates of 27.5%, 10.8%, and 11.1% respectively [2][10]. Dividend Policy - The company declared a special dividend of RMB 0.094 per share, maintaining the total dividend at RMB 0.358 per share for 2025, resulting in a dividend payout ratio of 88% and a dividend yield of 6.2% as of March 16 [6][10].

（於中華人民共和國註冊成立的股份有限公司） (A joint stock limited liability company incorporated in the People's Republic of China) （股份代碼：02386） (Stock Code: 02386) 15 March 2026 Dear non-registered shareholder(s), Reminder letter regarding the Arrangement of Electronic Dissemination of Corporate Communications Pursuant to the amended Rule 2.07A of the Rules Governing The Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") under the expansion of paperless listing regime and electronic dissemin ...