HCSC(SH:600378) HTSC·2025-09-01 11:23Investment Rating - The report maintains an "Overweight" rating for the company with a target price of RMB 38.08 [7][8]. Core Insights - The company achieved a revenue of RMB 7.76 billion in H1 2025, representing a year-over-year increase of 19.45%, and a net profit attributable to shareholders of RMB 645 million, up 20.85% year-over-year [1][2]. - The performance in Q2 2025 was particularly strong, with revenue reaching RMB 4.60 billion, a year-over-year increase of 25.56% and a quarter-over-quarter increase of 148.88% [1][2]. - The report highlights the ongoing improvement in the fluorochemical product market, which is expected to continue benefiting the company's performance [3][5]. Summary by Sections Financial Performance - In H1 2025, the fluorochemical segment saw a revenue increase of 25% to RMB 4.65 billion, with a gross margin improvement of 2 percentage points [2]. - The electronic chemicals segment experienced a revenue growth of 17% to RMB 580 million, maintaining stable gross margins despite competitive pressures [2]. - The high-end manufacturing chemical materials segment grew by 7% to RMB 1.51 billion, while the carbon reduction and engineering services segment grew by 30% to RMB 900 million [2]. Product Performance - Significant growth was observed in the sales of various products in Q2 2025, including fluorocarbon chemicals (53% increase), lithium-containing materials (108% increase), and specialty coatings (32% increase) [3][4]. - The report notes that the price differentials for key fluorochemical products have shown positive trends in July and August 2025, indicating continued market strength [3]. Project Development - Key projects are progressing as planned, including the 26,000 tons/year high-performance organic fluorine materials project and the 46,600 tons/year specialized new materials project, which have started production [4][5]. - The company is also advancing its electronic specialty gases project and a new high-performance specialty coatings project, which is currently in the preliminary design phase [4]. Earnings Forecast and Valuation - The earnings forecast for 2025-2027 has been revised upwards, with net profits projected at RMB 1.75 billion, RMB 2.07 billion, and RMB 2.47 billion respectively, reflecting increases of 66.06%, 18.48%, and 19.15% year-over-year [5][10]. - The report assigns a price-to-earnings ratio of 28x for 2025, based on the company's competitive advantages in refrigerants and high-end manufacturing [5][10].