Shanxi Securities·2025-06-24 09:36Investment Rating - The report maintains a "Synchronize with the market - A" rating for the basic chemical industry [1] Core Viewpoints - The intensification of geopolitical conflicts is irreversible, suggesting a focus on core assets in military materials. The ongoing "strike-reprisal" cycle due to nuclear issues between Israel and Iran, combined with the Russia-Ukraine conflict and Western sanctions, is leading to a deepening of systemic crises. Global military spending is projected to increase by 9.4% year-on-year in 2024, the highest growth rate since 1993, indicating a significant shift in defense-related investments [2][4][12] Summary by Relevant Sections Chemical Market Performance - The basic chemical sector has experienced a recent pullback, with a recommendation to focus on core military materials assets. The report highlights the ongoing geopolitical tensions and their impact on resource channels, which are expected to solidify conflict patterns [12][25] Investment Recommendations - The report suggests focusing on companies with significant changes in fundamentals due to geopolitical risks. Key companies include: 1. 昊华科技 (HaoHua Technology): High technical barriers and irreplaceable supporting products in aerospace materials and military equipment, with a strong market share [2][12] 2. 同益中 (Tongyi Zhong): A key player in the UHMWPE fiber market for military applications, benefiting from increased global military spending [2][12] - Additionally, attention is drawn to chemical products imported from Iran and Israel, which may face supply disruptions due to geopolitical tensions [13][25] Market Data - The report provides data on China's imports from Iran, with polyethylene, methanol, and sulfur being the top imported chemicals, valued at 95.5 billion, 30.8 billion, and 5.3 billion respectively for 2024. Imports from Israel include potassium chloride and bromine, valued at 13.3 billion and 6.6 billion respectively [13][25]