Core Viewpoint - The report highlights the current trends in the chemical industry, focusing on price movements, supply and demand dynamics, and investment opportunities in undervalued leading companies amid a backdrop of geopolitical tensions and changing market conditions [1][4][8]. Industry Dynamics - In the week of January 12-18, 49 out of 100 tracked chemical products saw price increases, while 20 experienced declines, and 31 remained stable. The average monthly price of 49% of products rose compared to the previous month [3]. - The average price of WTI crude oil futures increased by 0.54% to $59.44 per barrel, while Brent crude oil futures rose by 0.66% to $63.76 per barrel during the same week [4]. - As of January 9, U.S. crude oil production averaged 13.753 million barrels per day, a decrease of 58,000 barrels from the previous week but an increase of 272,000 barrels year-on-year. Total U.S. oil demand was 21.009 million barrels per day, up by 178,200 barrels from the previous week [4]. Price Movements - The price of butadiene rose by 4.04% to 9,663 yuan per ton as of January 18, with a month-on-month increase of 25.98% but a year-on-year decrease of 20.8%. The production of butadiene was 109,300 tons, down 2.85% from the previous week [5]. - Epoxy propane prices increased by 8.84% to 8,620 yuan per ton, with a year-on-year rise of 9.88%. The market operating rate was 65.38%, reflecting a 1.51% increase from the previous week [6][7]. Investment Recommendations - As of January 18, the price-to-earnings ratio (TTM) for the SW basic chemical sector is 14.68, at the 59.64% historical percentile, while the price-to-book ratio is 1.54, at the 40.20% historical percentile. The SW oil and petrochemical sector has a TTM P/E ratio of 13.44, at the 39.81% historical percentile [8]. - Investment suggestions include focusing on undervalued leading companies, the impact of "anti-involution" on supply in related sub-industries, and the growing importance of self-sufficiency in electronic materials and certain new energy materials amid rising prices [2][8]. - Recommended stocks include Wanhua Chemical, Hualu Hengsheng, and others, with a focus on sectors like semiconductor materials, OLED materials, and new energy materials [8][9].

Group 1 - The core viewpoint of the news is that Hualu Hengsheng's stock has experienced a significant increase, with a 5% rise on January 19, reaching a price of 36.11 yuan per share, and a total market capitalization of 76.669 billion yuan [1] - Hualu Hengsheng has seen a cumulative increase of 6.31% over the past four days, indicating strong market performance [1] - The company specializes in the production and sales of urea and methanol, with its main business revenue composition being 48.34% from new energy and new materials, 24.61% from chemical fertilizers, and 10.82% from acetic acid and derivatives [1] Group 2 - From the perspective of fund holdings, Hualu Hengsheng is a top ten holding for a fund managed by Xingzheng Asset Management, which reduced its holdings by 100,000 shares but still holds 520,100 shares, representing 3.16% of the fund's net value [2] - The fund has generated a floating profit of approximately 894,600 yuan today and 1,061,000 yuan during the four-day increase [2] - The fund manager, Zheng Fangbiao, has a total asset scale of 438 million yuan, with the best fund return during his tenure being 92.66% [3]

Investment Rating - The industry investment rating is "Positive" and maintained [8] Core Insights - In the previous two cyclical bull markets, alpha leading stocks significantly outperformed the basic chemical sector. These leaders possess both supply-demand improvements and cost advantages, leading to price elasticity and sustainable low-cost expansion. In cyclical bull markets, they exhibit performance drivers of volume and price increases, providing excess returns for investors [2][6][38]. - The report emphasizes the importance of investing in high-quality leading companies such as Wanhua Chemical, Hualu Hengsheng, Longbai Group, Yangnong Chemical, Huafeng Chemical, and Boyuan Chemical [2][6][38]. Summary by Sections Introduction: Why Focus on Leading Stocks in Cyclical Bull Markets? - The PPI (Producer Price Index) has shown a continuous narrowing of decline and is expected to turn positive by October 2025. This indicates a potential recovery in industrial product pricing and an improvement in market demand and supply conditions. The chemical industry, as a key industrial raw material, is likely to reflect these changes first, suggesting a transition from demand stagnation to a new round of inventory replenishment or capacity adjustment [4][14]. Performance of Alpha Leaders in Previous Cyclical Bull Markets - The report analyzes the stock selection and performance of alpha leaders during the last two cyclical bull markets (2016-2018 and 2020-2021). The selected stocks include Wanhua Chemical, Hualu Hengsheng, Longbai Group, and Yangnong Chemical, with the addition of Huafeng Chemical and Boyuan Chemical in the second round. The performance data shows that these leaders significantly outperformed the basic chemical index [5][18]. - In the first cycle (2016-2018), the highest stock price increases for these leaders were 488.9% for Wanhua Chemical, 281.4% for Hualu Hengsheng, 147.7% for Longbai Group, and 247.5% for Yangnong Chemical, with an average increase of 291.4%. The basic chemical index saw a maximum increase of around 39% during the same period [18][19]. - In the second cycle (2020-2021), the highest increases were 311.0% for Wanhua Chemical, 276.5% for Hualu Hengsheng, 314.2% for Longbai Group, 188.0% for Yangnong Chemical, 290.1% for Huafeng Chemical, and 728.7% for Boyuan Chemical, with an average increase of 351.4% compared to a maximum of 136% for the basic chemical index [18][19]. Investment Recommendations - The report suggests focusing on high-quality leading companies for investment opportunities, as they are expected to benefit from supply-demand improvements and cost advantages. The overall chemical sector is currently at a low point, but with anticipated global economic growth, demand for chemical products is expected to increase. The report also highlights the potential for a recovery in PPI and chemical prices in 2026 [6][38][39].

Report Summary 1. Report Industry Investment Rating No information provided in the content. 2. Core Viewpoints of the Report - This week, the average prices of pure MDI, polymerized MDI, and TDI in the polyurethane industry were 17,843 yuan/ton, 14,014 yuan/ton, and 14,188 yuan/ton respectively, with week - on - week decreases of 200 yuan/ton, 157 yuan/ton, and 290 yuan/ton. Their respective gross profits also declined [2]. - In the oil - gas - olefin sector, prices of raw materials such as ethane, propane, etc. had different changes this week. The average prices of polyethylene and polypropylene increased, and the theoretical profits of different production routes also changed accordingly [2]. - In the coal - chemical industry, the average prices of synthetic ammonia, urea, DMF, and acetic acid had slight fluctuations, and their gross profits also changed slightly [2]. - In the animal nutrition products sector, the average prices of VA, VE, solid methionine, and liquid methionine had minor changes this week [2]. 3. Summary by Relevant Catalogs 1. Basic Chemical Weekly Data Briefing - **Related Company Performance Tracking** - The Basic Chemical Index had a weekly increase of 0.9%, a monthly increase of 12.3%, a quarterly increase of 12.9%, an annual increase of 44.7%, and a year - to - date increase of 6.0% as of 2026/1/16. Different chemical companies had different performance in terms of stock price changes and earnings. For example, Wanhua Chemical's stock price decreased by 0.8% this week, while Baofeng Energy's increased by 5.2% [8]. - The report also provided data on the total market value, net profit attributable to the parent company, PE, and PB of relevant companies from 2024A to 2027E [8]. - **Industry Chain Data** - **Polyurethane Industry Chain**: The average prices and gross profits of pure MDI, polymerized MDI, and TDI decreased this week. Their respective seven - year quantiles were 51%, 45%, and 65% for prices, and 71%, 49%, and 71% for gross profits [8]. - **Oil - Gas - Olefin Industry Chain**: - **Raw Material Prices**: The average prices of ethane, propane, NYMEX natural gas, Brent crude oil, and naphtha had different changes. Their ten - year quantiles also varied [8]. - **Profit Comparison of Different Routes**: The single - ton profits of different production routes for polyethylene and polypropylene had different changes compared to the previous week, the beginning of the year, and the same period last year [8]. - **C2 and C3 Plates**: The average prices and price differences between products and raw materials in the C2 and C3 plates had different changes, with different ten - year quantiles. For example, the price of ethylene decreased by 90 yuan/ton, and the price difference between HDPE and ethylene increased by 353 yuan/ton [10]. - **Coal - Chemical Industry Chain**: - **Coal - Coke Products**: The average prices of coking coal and coke decreased, and the gross profit of coke was - 47 yuan/ton, with a 3 - yuan decrease [10]. - **Traditional Coal - Chemical Products**: The average prices and gross profits of synthetic ammonia, methanol, urea, DMF, and acetic acid had different changes, with different seven - year quantiles [10]. - **New Materials**: The average prices and gross profits of DMC, oxalic acid, octanol, adipic acid, caprolactam, PA6, and PA66 had different changes, with different seven - year quantiles [10]. - **Animal Nutrition Products Industry Chain**: The average prices of VA, VE, solid methionine, and liquid methionine changed slightly, with different ten - year quantiles [10]. 2. Basic Chemical Weekly Report - **2.1 Basic Chemical Index Trends**: The report did not provide specific content in the text, only the title. - **2.2 Polyurethane Sector**: The report presented the price trends of pure MDI, polymerized MDI, and TDI in China, as well as their price - spread situations [16][18][20]. - **2.3 Oil - Gas - Olefin Sector**: It showed the price trends of raw materials such as MB ethane, NYMEX natural gas, East China propane, Brent crude oil, domestic steam coal, and naphtha, and the profit situations of different production routes for polyethylene and polypropylene [24][27][29]. - **2.4 Coal - Chemical Sector**: The report presented the price trends and gross profit situations of coal - coke products, traditional coal - chemical products, and new materials in the coal - chemical industry [40][46][51]. - **2.5 Animal Nutrition Products Sector**: It showed the price trends of VA, VE, solid methionine, and liquid methionine [55][59][61].

Group 1 - The core point of the article is that Hualu Hengsheng (Jingzhou) Co., Ltd. has increased its registered capital from 5 billion RMB to 7 billion RMB, representing a 40% increase [2] - Hualu Hengsheng (Jingzhou) Co., Ltd. was established in November 2020 and is involved in the manufacturing and sales of basic chemical raw materials and chemical products [2] - The legal representative of the company is Zhuang Guangshan, and its shareholders include Hualu Hengsheng (600426), Hualu Group Co., Ltd., and Hualu Investment Development Co., Ltd. [2]

Core Viewpoint - Hualu Hengsheng (Jingzhou) Co., Ltd. has increased its registered capital from 5 billion RMB to 7 billion RMB, marking a 40% increase, indicating potential growth and investment in the chemical manufacturing sector [2]. Company Information - Hualu Hengsheng (Jingzhou) Co., Ltd. was established in November 2020 and is legally represented by Zhuang Guangshan [2][4]. - The company operates in the manufacturing and sales of basic chemical raw materials, chemical products, and specialized chemical products [2][4]. - The shareholders of the company include Hualu Hengsheng (600426), Hualu Group Co., Ltd., and Hualu Investment Development Co., Ltd. [2][4]. Capital Changes - The registered capital has been increased from 5 billion RMB to 7 billion RMB, which is a 40% increase [2]. - The total investment amount has also changed from 5 billion RMB to 7 billion RMB [3]. Shareholder Structure - The major shareholders include: - Shandong Hualu Hengsheng Chemical Co., Ltd. holding 70% with a subscribed capital of 4.9 billion RMB [4]. - Hualu Group Co., Ltd. holding 20% with a subscribed capital of 1.4 billion RMB [4]. - Hualu Investment Development Co., Ltd. holding 10% with a subscribed capital of 700 million RMB [4].

Core Viewpoint - Hualu Hengsheng (Jingzhou) Co., Ltd. has increased its registered capital from 5 billion RMB to 7 billion RMB, marking a 40% increase, indicating potential growth and expansion in its operations [1]. Company Information - Hualu Hengsheng (Jingzhou) Co., Ltd. was established in November 2020 and is represented by legal representative Zhuang Guangshan [1][3]. - The company operates in the manufacturing and sales of basic chemical raw materials, chemical products, and specialized chemical products [1][3]. - The company is jointly owned by Hualu Hengsheng (600426), Hualu Group Co., Ltd., and Hualu Investment Development Co., Ltd. [1][4]. Capital Structure - The registered capital has been increased to 7 billion RMB, which is equivalent to approximately 1.05 billion USD [1]. - The ownership structure includes: - Shandong Hualu Hengsheng Chemical Co., Ltd. holding 70% with a subscribed capital of 4.9 billion RMB [4]. - Hualu Group Co., Ltd. holding 20% with a subscribed capital of 1.4 billion RMB [4]. - Hualu Investment Development Co., Ltd. holding 10% with a subscribed capital of 700 million RMB [4].

Group 1 - The core viewpoint of the articles indicates a positive trend in the petrochemical industry, with the China Petrochemical Industry Index rising by 0.8% and significant gains in constituent stocks such as Guangwei Composites and Tongcheng New Materials [1][2] - The Petrochemical ETF (159731) has seen a continuous inflow of funds over the past seven days, totaling 173 million yuan, reaching a new high in size at 431 million yuan [1] - The Petrochemical ETF has recorded a net value increase of 54.60% over the past two years, with the highest single-month return since inception being 15.86% [1] Group 2 - Tianfeng Securities analysis suggests that the chemical industry is entering a new phase of capital expenditure, with construction projects reaching their highest year-on-year growth since Q3 2012 [2] - The chemical industry is expected to experience a supply-demand reversal by 2026, supported by policies aimed at stabilizing growth and reducing internal competition [2] - The top ten weighted stocks in the China Petrochemical Industry Index account for 56.73% of the index, with major companies including Wanhua Chemical and China Petroleum [2]

Group 1 - The chemical sector is leading the market with a significant increase, as evidenced by the chemical ETF (516020) rising by 0.99% [1] - Among the constituent stocks, rubber additives and phosphorus chemicals are showing strong performance, with Tongcheng New Materials hitting the daily limit and Hongda shares increasing by over 5% [1] - The overall trend indicates a positive outlook for the chemical industry, with expectations of a rebound in profitability and valuation in 2026 [3] Group 2 - Major lithium battery manufacturers are initiating large-scale equipment bidding, with reports of hundreds of GWh orders received, indicating a robust demand in the market [2] - It is projected that the new lithium battery production capacity will exceed 1 TWh by 2026, marking a historical high for new orders among equipment manufacturers [2] - The chemical ETF (516020) tracks the CSI sub-industry index, covering key themes such as AI computing power and new energy, with nearly 50% of its holdings in large-cap leading stocks [3]

Group 1 - The chemical sector is leading the market gains, with the basic chemical sector showing the highest increase among 30 CITIC primary industries, reflecting a 0.99% rise in the chemical ETF (516020) [1] - Key stocks in the sector include rubber additives and phosphorus chemicals, with notable performances from Tongcheng New Materials, which hit the daily limit, and Hongda Co., which rose over 5% [1][2] - The overall market sentiment indicates a strong rebound in the chemical sector, driven by significant orders from leading lithium battery manufacturers, with expectations of substantial growth in lithium battery production capacity by 2026 [2][3] Group 2 - Industry analysts predict that the chemical industry's profitability is likely to recover in 2026 after experiencing a downturn in 2025, with a new phase of supply-demand rebalancing beginning [3] - The chemical ETF (516020) tracks the CSI segmented chemical industry theme index, with nearly 50% of its holdings concentrated in large-cap leading stocks, providing investors with opportunities to capitalize on the sector's rebound [3] - The ETF includes exposure to various themes such as AI computing, anti-involution policies, and new energy, which are expected to drive growth in the chemical sector [3]