EASTERN SHENGHONG(SZ:000301) Huaxin Securities·2026-02-11 00:24Investment Rating - The report assigns a "Buy" rating for Dongfang Shenghong (000301.SZ) for the first time [1]. Core Insights - Dongfang Shenghong is expected to turn profitable in 2025 with a projected net profit attributable to shareholders ranging from 100 million to 150 million yuan, marking a significant turnaround from losses [1][2]. - The company anticipates a substantial reduction in non-recurring losses, with estimates ranging from 5.62 billion to 5.12 billion yuan, reflecting a year-on-year decrease of 78.82% to 80.71% [1]. - The fourth quarter of 2025 is projected to show a net profit of -0.26 to 0.24 billion yuan, indicating a year-on-year reduction in losses of 97.04% to 102.73% [1]. Summary by Sections Performance Forecast - The company is expected to achieve a net profit of 1.23 billion yuan in 2025, with projections of 1.39 billion yuan in 2026 and 1.70 billion yuan in 2027, indicating a growth rate of 1026.4% in 2026 and 22.4% in 2027 [11][13]. Operational Stability - The stable operation of the 16 million tons/year integrated refining project is a key factor in the company's performance improvement, with smooth production and sales [2]. - The average price of WTI and Brent crude oil is expected to decline significantly, contributing positively to the company's refining margins [2]. By-Product Revenue - The company benefits from the largest atmospheric distillation unit in China, which includes a sulfur recovery unit, leading to unexpected revenue from sulfur and sulfuric acid due to rising market prices [3]. - In the fourth quarter of 2025, the market prices for sulfur and sulfuric acid increased by 46.71% and 39.99% respectively compared to the second quarter, contributing significantly to the company's profits [3]. New Materials Business - The company's strategic shift towards high-value-added chemical intermediates is expected to enhance profitability, with the proportion of high-value products increasing from 50% to over 70% [10]. - The focus on new materials, particularly photovoltaic-grade EVA, is anticipated to drive future profit growth and valuation enhancement, benefiting from the global increase in solar installations [10].