Investment Rating - The industry is rated as "Recommended" for investment, indicating a favorable outlook for the sector [2][8]. Core Insights - The price center of H acid is expected to rise due to tightening supply and demand dynamics, with a current market average price of 41,750 RMB/ton as of June 13, 2025, reflecting an increase of 5,750 RMB/ton since early January 2025 [6][8]. - The active dye industry is undergoing a phase of industrial upgrading and consolidation, with many small and medium enterprises being eliminated due to sustained price pressure since late 2019 [6][8]. - H acid, a key raw material for producing active dyes, constitutes 30%-50% of the total cost, and its price increase is likely to positively impact active dye prices, which have recently risen from 20 RMB/kg to 23 RMB/kg [6][8]. Summary by Sections Industry Overview - H acid production faces challenges such as high energy consumption and significant environmental pollution, leading to production halts in developed countries, with global capacity concentrated in China and India [6][8]. - Domestic effective H acid capacity is currently below 60,000 tons, resulting in a supply gap exceeding 10% [6][8]. Cost and Pricing Dynamics - The cost support from H acid is expected to facilitate a smoother transmission of price increases in active dyes, benefiting companies with integrated production capacities [6][8]. - The report highlights that companies like Zhejiang Longsheng, Jinchicken Co., Luntai Co., and Jihua Group are well-positioned to benefit from these dynamics [6][8]. Key Companies and Profit Forecast - Key companies to watch include: - Zhejiang Longsheng (Stock Code: 600352.SH) with an estimated EPS of 0.67 for 2025 and a PE ratio of 16 [9]. - Jinchicken Co. (Stock Code: 300798.SZ) currently un-rated but with significant production capacity [9]. - Luntai Co. (Stock Code: 002440.SZ) with an estimated EPS of 0.25 for 2025 and a PE ratio of 33 [9]. - Jihua Group (Stock Code: 603980.SH) with an estimated EPS of 0.25 for 2024 and a PE ratio of 81 [9].

Group 1 - The dye sector is experiencing localized activity, with Jinji Co., Ltd. (300798) hitting the daily limit up [1] - Other companies in the sector, such as Runtu Co., Ltd. (002440), Hualitai (001217), Annoqi (300067), and Zhejiang Longsheng (600352), also saw increases in their stock prices [1]

Core Viewpoint - The acquisition of Dystar by Zhejiang Longsheng marks the end of a 15-year-long acquisition process, solidifying Longsheng's control over Dystar and resolving longstanding legal disputes with Kiri Industries [6][7][11]. Company Overview - Zhejiang Longsheng Group has signed a share purchase agreement to acquire 37.57% of Dystar from Kiri Industries, making Dystar a wholly-owned subsidiary [3][6]. - The acquisition price has reached $697 million, exceeding initial expectations but deemed strategically valuable for Longsheng [11]. Legal Background - The acquisition stems from a ruling by the Singapore International Commercial Court (SICC) that mandated the sale of Dystar's 100% equity [6]. - Kiri Industries had previously filed a lawsuit against Longsheng, alleging oppressive behavior and seeking fair value for its shares [8][9]. Financial Performance - Dystar reported a net profit of $116 million in 2024, with a projected annualized net profit of approximately $92 million for Q1 2025 [17]. - Longsheng's revenue for 2024 is expected to be around 15.88 billion yuan, with a net profit of 2.03 billion yuan, reflecting a growth of over 30% [13]. Strategic Implications - The acquisition is expected to create synergies by integrating Dystar's R&D, production, and sales resources, enhancing operational efficiency [13][15]. - Longsheng aims to expand its market presence, particularly in Southeast Asia and Europe, leveraging Dystar's established global sales network [13]. Future Outlook - Longsheng plans to extend its business from traditional dyeing to specialty chemicals, focusing on key intermediates and enhancing supply chain control [14]. - The integration of Dystar's patented technologies is anticipated to accelerate the development of high-value products, potentially increasing profit margins by 3-5 percentage points [15].

Core Viewpoint - Zhejiang Longsheng plans to acquire a 37.57% stake in DyStar from KIRI for $697 million, which will make DyStar a wholly-owned subsidiary, potentially ending a nearly decade-long legal dispute with KIRI [2][3][4] Group 1: Acquisition Details - The acquisition price of $697 million (approximately 5.02 billion RMB) is significantly higher than previous valuations, reflecting the rising value of DyStar's shares over the years [2][3] - DyStar is a leading provider of high-end dye and chemical solutions, and the acquisition is seen as a strategic move to consolidate resources and eliminate potential shareholder disputes [4][5] Group 2: Historical Context - DyStar faced bankruptcy in 2010 and was acquired by KIRI for €40 million, while Zhejiang Longsheng initially invested €22 million in KIRI's convertible bonds, later converting to a 62.43% stake in DyStar [3][4] - A series of legal battles began in 2015 when KIRI accused Zhejiang Longsheng of oppressing minority shareholders, leading to multiple court rulings that increased the valuation of the stake [3][4] Group 3: Financial Performance - Zhejiang Longsheng's revenue and profit have fluctuated significantly from 2020 to 2024, with a notable decline in 2023 due to intense market competition and price pressures [6][7] - The company reported a revenue of 156.05 billion RMB in 2020, down 26.96% year-on-year, and a net profit of 41.76 billion RMB, down 16.86% [6] - In 2024, the company anticipates a rebound with projected revenue of 158.84 billion RMB, a slight increase of 3.80%, and a net profit of 20.30 billion RMB, reflecting a growth of over 30% [7]

Investment Rating - The report maintains an "Accumulate" rating for Zhejiang Longsheng [5] Core Views - The company's revenue for 2024 is projected at 15.884 billion yuan, a year-on-year increase of 3.79%, while the net profit attributable to shareholders is expected to reach 2.030 billion yuan, up 32.36% year-on-year [1] - The dye and intermediate business profitability is recovering, and the real estate business is gradually realizing revenue [2][12] - The company is expected to see revenue growth of 8.5%, 5.5%, and 6.3% for the years 2025, 2026, and 2027 respectively, with net profits of 2.104 billion yuan, 2.330 billion yuan, and 2.445 billion yuan for the same years [13] Financial Performance - In 2024, the company's revenue from dye, intermediates, real estate, and additives is projected to be 7.591 billion, 3.282 billion, 2.482 billion, and 1.002 billion yuan respectively, with year-on-year growth rates of 0.94%, 4.58%, 87.26%, and 7.63% [2] - The gross margins for these segments are 31.67%, 29.40%, 27.87%, and 28.75%, with year-on-year changes of 3.83, -2.61, -2.42, and 4.99 percentage points respectively [2] - The company reported a significant increase in operating cash flow, which rose by 236.79% year-on-year to 9.265 billion yuan in 2024 [4] Production and Sales - In 2024, the company produced 220,600 tons of dyes, a 12.48% increase year-on-year, and sold 238,400 tons, up 7.17% [3] - The production and sales of additives and intermediates also saw increases, with additives' production up 14.23% and intermediates' production up 19.31% year-on-year [3] Market Position - Zhejiang Longsheng maintains a leading position in the dye industry with an annual production capacity of 300,000 tons of dyes and 100,000 tons of additives, holding the largest market share globally [11] - The company has expanded its intermediate production capacity to 119,500 tons, with significant cost advantages in the production of key intermediates [11] Real Estate Development - The real estate segment is progressing well, with projects like the Xiangyu Yumaofu contributing to a revenue increase of 87.26% year-on-year [12] - The company has a pre-sale amount of 6.442 billion yuan for the Bay Shang Ming Yuan project, with a pre-sale ratio exceeding 80% [12]

Core Viewpoint - Zhejiang Longsheng plans to acquire 37.57% of DyStar Global Holdings for approximately $697 million to resolve an ongoing lawsuit and gain full ownership of the company, which is a leading global supplier of textile dyes and chemicals [1][5][6]. Group 1: Acquisition Details - The acquisition will increase Zhejiang Longsheng's stake in DyStar from 62.43% to 100% [5]. - The transaction is expected to resolve litigation issues with KIRI Company, the seller, and prevent DyStar from being sold as a whole [5][6]. - DyStar has a strong market position and is profitable, with a projected net profit of $103 million for 2024 [1][6]. Group 2: Financial Performance - In 2024, Zhejiang Longsheng reported a net profit of 2.03 billion yuan, a year-on-year increase of 32.36% [8]. - The company achieved a net profit of 396 million yuan in Q1 2024, representing a 100.44% increase year-on-year [7][8]. - Cumulatively, since its listing in 2003, Zhejiang Longsheng has achieved a total net profit of 39.2 billion yuan [2][11]. Group 3: Market Position and Industry Context - Zhejiang Longsheng is a leading player in the textile chemicals market, with a global market share and production capacity of 300,000 tons of dyes and 100,000 tons of auxiliaries annually [9]. - The Chinese dye industry accounts for over 70% of global production, making China the largest producer and consumer of dyes [8][9]. - Despite market pressures and declining profits in recent years, the company's competitive advantages have allowed it to maintain strong profitability [10][11].

Core Viewpoint - Zhejiang Longsheng (600352.SH) announced the acquisition of a 37.57% stake in Desida Global Holdings (Singapore) from KIRI Company for approximately $69.65 million, aiming to make Desida a wholly-owned subsidiary and resolve ongoing litigation with KIRI [1][2]. Group 1: Transaction Details - The acquisition involves purchasing KIRI's 37.57% stake in Desida, which has a clear ownership structure and is not subject to any legal restrictions or encumbrances [2]. - Desida's total issued and paid-up capital is SGD 69.83 million, with Longsheng holding 62.43% of the shares and KIRI holding 37.57% [2]. - The valuation of Desida is estimated between $1.178 billion and $1.288 billion, based on an EV/EBITDA multiple of 8.6 and projected EBITDA of $138 million for 2024 [2]. Group 2: Strategic Implications - This acquisition aligns with the company's strategic goal of becoming a leading global specialty chemicals producer, which is expected to enhance profitability once Desida becomes a wholly-owned subsidiary [3]. - The funding for this transaction will come from the company's own funds and bank loans, leading to a slight increase in overall debt levels [3]. Group 3: Financial Performance - For the fiscal year 2024, Zhejiang Longsheng reported total revenue of CNY 15.88 billion, a year-on-year increase of 3.79%, and a net profit attributable to shareholders of CNY 2.03 billion, up 32.36% [4][6]. - In the first quarter of 2025, the company experienced a revenue decline of 7.21% to CNY 3.24 billion, while net profit surged by 100.44% to CNY 396 million [6][7].

Group 1 - The annual general meeting of Zhejiang Longsheng Group Co., Ltd. was held on May 30, 2025, with no resolutions rejected [2] - The meeting was presided over by Chairman Ruan Weixiang, and all procedures complied with the Company Law and Articles of Association [2][3] - All proposals presented at the meeting, including the 2024 annual financial report and profit distribution plan, were approved [4][5][6] Group 2 - The company signed a share purchase agreement to acquire 37.57% of the issued share capital of DyStar Global Holdings (Singapore) Ltd. from KIRI Industries Limited for USD 69,654.78 thousand [21][23] - The transaction is not classified as a related party transaction or a major asset restructuring and falls within the board's authority [22] - The acquisition aims to resolve ongoing litigation and make DyStar a wholly-owned subsidiary, enhancing the company's profitability [23][34] Group 3 - The financial evaluation of DyStar estimated its enterprise value between USD 1.178 billion and USD 1.288 billion, with a projected value of 100% shares between USD 1.791 billion and USD 1.901 billion [26][27] - The purchase price was determined based on fair negotiations and market valuation methods, including EBITDA multiples [26] - The acquisition is expected to increase the company's liabilities but is aligned with its strategic goal of becoming a leading specialty chemicals producer [34]

Core Viewpoint - Zhejiang Longsheng is set to acquire a 37.57% stake in Dystar Global Holdings for $697 million, aiming to resolve ongoing litigation with KIRI Industries and make Dystar a wholly-owned subsidiary [1][2]. Group 1: Acquisition Details - The acquisition is a response to a ruling by the Singapore International Commercial Court mandating the sale of Dystar shares [1]. - The acquisition cost has increased over time, with the valuation of the 37.57% stake rising from $481.6 million in 2021 to $603.8 million in 2023 [2][3]. - The latest transaction price reflects an increase of over $93 million compared to the March 2023 valuation [3]. Group 2: Financial Performance - Dystar is projected to achieve revenues of $753 million and a net profit of $103 million in 2024 [5]. - In Q1 2025, Dystar reported revenues of $178 million and a net profit of approximately $23 million [5]. - The acquisition aligns with Zhejiang Longsheng's strategy to become a leading global specialty chemicals producer, with expectations of enhanced profitability post-acquisition [5].

Group 1: Share Buybacks and Investments - China Communications Construction Company plans to repurchase shares worth between 500 million to 1 billion yuan, with a maximum repurchase price of 13.58 yuan per share [6] - Yingtan Technology intends to adjust the upper limit of its share repurchase price from 38 yuan to 65.04 yuan per share due to recent stock price increases [3] - Zhongjian Technology is set to invest 1.402 billion yuan in a high-performance carbon fiber product project, aiming for an annual production capacity of 2,000 tons [13] Group 2: Mergers and Acquisitions - Zhejiang Longsheng plans to acquire a 37.57% stake in its subsidiary, Desida, for 697 million USD, aiming to resolve litigation issues and consolidate ownership [9] - Bohai Automotive intends to purchase equity stakes in several companies, with its stock set to be suspended from trading starting June 3, 2025, for up to 10 trading days [4] Group 3: Regulatory and Compliance Issues - Aerospace Morningstar has been suspended from participating in military procurement activities due to reported violations [2] - ST Baili received an administrative penalty notice from the Hunan Securities Regulatory Bureau for failing to disclose non-operating fund occupation matters, facing fines totaling 4 million yuan [8] - Jinfu Technology has also received an administrative penalty notice for falsely reporting revenue, with proposed fines totaling 7.5 million yuan [12] Group 4: New Listings and Stock Changes - Jiewate has submitted an application for H-share issuance and listing on the Hong Kong Stock Exchange, pending regulatory approvals [4] - ST Gengxing will change its stock name to ST Haiqin starting June 6, 2025, while maintaining its stock code [5]