zhenhua chemical(SH:603067) Changjiang Securities·2025-12-14 06:41Investment Rating - The report initiates coverage with a "Buy" rating for the company [11][13]. Core Viewpoints - The company is a global leader in the chromium salt industry, employing a market share-first and low-cost expansion strategy, which enhances its scale advantages. The company is set to benefit from the growing demand for chromium salts, particularly in high-growth sectors such as high-temperature alloys and metal chromium, while supply constraints are expected to tighten the market [3][11]. Company Overview - The company is engaged in the research, production, and sales of chromium compounds and by-products, utilizing advanced clean production technologies. Its main products include sodium dichromate, potassium dichromate, chromium anhydride, chromium oxide green, and others, which are widely used across various industries [6][20][24]. Demand Side - The demand for chromium salts is primarily driven by traditional sectors such as leather tanning (30.7%), surface treatment (26.5%), refractory materials and metal chromium (21.1%), and pigments (12.0%). The growth in high-temperature alloys is expected to significantly boost the demand for metal chromium and, consequently, chromium salts [7][56][66]. Supply Side - The production of chromium salts faces high environmental barriers, with a significant concentration in China, which accounts for over 40% of global production. The company holds a dominant market share of over 50% in China, benefiting from its advanced production techniques that minimize waste [8][24][27]. Market Outlook - The report anticipates a tightening supply-demand balance in the chromium salt market, driven by limited supply growth and increasing demand from high-temperature alloys and other emerging sectors. The company is expected to see a gradual increase in production capacity, particularly following the relocation of its Chongqing base [9][10][36]. Financial Performance - The company has demonstrated steady revenue and profit growth since 2020, with a projected revenue of CNY 40.7 billion in 2024, reflecting a 10% year-on-year increase. The net profit for the same year is expected to reach CNY 4.7 billion, a 27.5% increase from the previous year [36][39][46].