SINOLINK SECURITIES·2025-04-25 07:15Investment Rating - The report indicates a declining trend in public fund allocation to the chemical industry, with the allocation ratio dropping to 4.1% in Q1 2025, down 1.6 percentage points year-on-year and 0.7 percentage points quarter-on-quarter, reflecting a historical low level [1][11]. Core Insights - The focus of public funds has shifted, with a notable decrease in the concentration of holdings in leading companies within the chemical sector. The top ten heavyweights' market capitalization share fell from 46.2% in Q4 2024 to 41.9% in Q1 2025 [1][11]. - Attention has been primarily directed towards the civil explosives and fluorochemical sectors in Q1 2025, with significant increases in holdings for companies like Guangdong Hongda and Zhenhua Co., while reductions were seen in companies such as Wanhua Chemical and Sinochem International [2][3]. - The report highlights a strong interest in price-increasing sectors such as fluorochemicals, chromium salts, and pesticides, alongside the civil explosives sector, which is expected to benefit from ongoing supply-side reforms and increasing demand in regions like Xinjiang and Tibet [3][4]. Summary by Sections Public Fund Allocation in the Chemical Industry - The market capitalization share of public funds in the chemical industry continues to decline, with a significant drop noted since 2020, reaching a low of 4.1% in Q1 2025 [1][11]. Individual Stock Movements - Key stocks that saw increased holdings include Guangdong Hongda, Zhenhua Co., and Shengquan Group, while major reductions were observed in Wanhua Chemical and Sinochem International [2][3][4]. Industry Changes - The civil explosives, inorganic salts, and fluorochemical sectors are gaining market attention, with the civil explosives sector expected to see improved conditions due to domestic demand and policy support [3][4][24]. Investment Recommendations - The report suggests focusing on sectors with price increase potential and strong domestic demand, particularly in civil explosives and new materials, while advising caution regarding sectors heavily exposed to export risks [4].