Report Summary 1. Report Industry Investment Rating No information provided. 2. Core View of the Report The fundamentals of the lithium carbonate market are weak, with a possible decline in the consumer end and the lithium carbonate futures market. Short - term attention should be paid to the new warehouse receipt registration after the cancellation of warehouse receipts. It is recommended to sell on rallies for hedging [1][2][3]. 3. Summary According to Related Content Market Analysis - On June 23, 2025, the opening price of the lithium carbonate main contract 2509 was 58,860 yuan/ton, and the closing price was 59,120 yuan/ton, a 0.77% drop from the previous settlement price. The trading volume was 259,487 lots, and the open interest was 356,954 lots, an increase of 2,607 lots from the previous trading day. The total open interest of all contracts was 656,617 lots, an increase of 9,340 lots. The total trading volume of contracts decreased by 167,517 lots to 282,439 lots, and the overall speculation degree was 0.43. The number of lithium carbonate warehouse receipts was 26,779 lots, a decrease of 1,014 lots from the previous day. The futures were at a discount of 830 yuan/ton to the spot price of battery - grade lithium carbonate [1]. Spot Market - On June 23, 2025, the price of battery - grade lithium carbonate was 59,300 - 60,600 yuan/ton, a decrease of 4,500 yuan/ton from the previous trading day. The price of industrial - grade lithium carbonate was 57,850 - 58,850 yuan/ton, also a 4,500 - yuan/ton decrease. The market continued to have an oversupply situation. Supply was abundant, while downstream demand was weak, with only rigid demand for restocking. There was no sign of concentrated restocking. The market showed a differentiated situation: large lithium salt enterprises had relatively firm prices, while some small and medium - sized enterprises' prices were loose. The overall market trading was light [2]. Strategy - Unilateral: Sell on rallies for hedging. There is no suitable strategy for inter - period, cross - variety, spot - futures, and options trading [3][4].

Core Viewpoint - The egg market in Jinan has seen a significant price drop, reaching a five-year low, primarily due to oversupply and stable demand, leading to a decrease in both wholesale and retail prices [1][2][4]. Group 1: Price Trends - The retail price of eggs in Jinan has fallen to around 2.99-3.19 yuan per pound, which is 10% lower than the previous month [2]. - The wholesale price of eggs is reported at 2.99 yuan per pound, down 0.71 yuan compared to the same period last year [4]. - The price of a box of eggs (30 pounds) has decreased from approximately 130 yuan before the Spring Festival to 83 yuan as of June 18 [4]. Group 2: Supply and Demand Dynamics - The supply of eggs has increased significantly due to a rise in the number of laying hens, with the national stock reaching 1.334 billion, a 7.23% increase year-on-year [6]. - Despite the increase in production, the overall market demand has not risen correspondingly, leading to an oversupply situation [6]. - The stable demand has resulted in a situation where prices are not significantly affecting sales volume, maintaining overall profit levels for retailers [2]. Group 3: Impact on Producers - Egg producers are facing substantial losses, with wholesale prices down 20%-30% year-on-year, leading to selling prices around 2.79 yuan per pound [5][6]. - The production cost for egg producers is estimated to be between 3.5-3.65 yuan per pound, resulting in losses of 0.7-0.9 yuan per pound sold [6]. - Producers are currently cautious about expanding their operations further, with many opting to observe market conditions before making additional investments [6].

Core Viewpoint - The price of lithium carbonate has experienced a significant decline, dropping to a recent low of 59,500 yuan/ton, which is a 90% decrease from the peak of 600,000 yuan/ton in 2022, raising concerns about the sustainability of lithium salt enterprises and the entire lithium battery supply chain [1][2]. Price Trends - In 2023, the average price of battery-grade lithium carbonate in China fell to 103,000 yuan/ton by the end of the year, an 80.38% decrease from the average of 525,000 yuan/ton at the beginning of the year [2]. - The price trend for 2024 is expected to show a "rise then fall" pattern, with a 30% increase in early months due to environmental issues and inventory replenishment, followed by a decline due to supply-demand imbalance [2][6]. - As of May 23, 2025, the average price of battery-grade lithium carbonate was 63,100 yuan/ton, while industrial-grade was 61,500 yuan/ton, indicating a continued downward trend [2]. Supply and Demand Dynamics - The lithium market is facing oversupply, with global lithium salt production increasing by 23% year-on-year in Q1 2025, while the demand for power batteries is showing signs of slowing down [6][7]. - As of May 2025, total social inventory of lithium carbonate reached 131,700 tons, with salt plant inventory increasing by 8.8%, indicating prolonged destocking cycles [6][7]. Cost Structure Changes - The production costs for lithium salt enterprises are decreasing, with salt lake enterprises maintaining costs around 40,000 yuan/ton, while African mines range from 60,000 to 70,000 yuan/ton [8]. - Companies are transitioning to lower-cost production methods, with some salt lake projects expected to achieve production costs as low as 32,000 yuan/ton [8]. Market Outlook - The current market sentiment remains pessimistic due to the downward spiral of salt and mineral prices, with many lithium salt enterprises struggling to maintain profitability [3][5]. - Analysts suggest that the market may only return to balance after the elimination of loss-making capacities, indicating that prices are likely to remain weak in the short term [8].

Financial Performance - In 2024, the company achieved revenue of 26.93 billion yuan, a year-on-year increase of 2.4% [1] - The net profit attributable to shareholders was 2.22 billion yuan, a year-on-year decrease of 10.4%, with earnings per share of 0.45 yuan, which is in line with market expectations [1] - In Q4 2024, the company reported revenue of 6.56 billion yuan and a net profit of 210 million yuan [1] Industry Trends - The global spandex production capacity is expected to increase to 1.75 million tons by the end of 2024, with a year-on-year growth rate of 7%, primarily driven by the Chinese market [2] - China's spandex production capacity will reach 1.355 million tons, a year-on-year increase of 9.3%, although some new installations have been delayed or reduced [2] - Domestic spandex production was 1.045 million tons, up 11.3% year-on-year, while exports increased by 13.2% to 69,600 tons, and imports decreased by 4.8% to 47,900 tons [2] - The average price of spandex is projected to decline throughout 2024, with an annual average of 26,400 yuan per ton, down 17.1% year-on-year [2] Market Dynamics - The domestic adipic acid production capacity is expected to reach 4.1 million tons in 2024, a 9.6% increase from the previous year, with production rising by 10.8% to 2.56 million tons [2] - The consumption of adipic acid in downstream applications is projected to grow by 9.7% to 1.92 million tons, but the market remains oversupplied, leading to continued pressure on profitability [2] - The industry is facing a significant decline in gross profit margins, with the projected gross profit per ton for 2024 at -1,303 yuan, compared to -222 yuan in 2023 [2] Business Outlook - The polyurethane raw material market is stable, providing the company with a steady cash flow, with the polyurethane footwear market size reaching 5.61 billion USD, a year-on-year increase of 7.9% [3] - The current market share of polyurethane raw materials in China's footwear industry is below 10%, indicating significant growth potential compared to developed countries [3] - The industry is expected to see increased concentration as smaller enterprises face profitability challenges, benefiting larger companies like Huafeng [3] Profit Forecast and Valuation - Due to the pressure on spandex and adipic acid prices, the net profit forecast for 2025 has been reduced by 10% to 3.15 billion yuan, with a new forecast for 2026 at 3.74 billion yuan [4] - The current stock price corresponds to a price-to-earnings ratio of 13 times for 2025 and 11 times for 2026 [4] - The target price is maintained at 9.0 yuan, reflecting a potential upside of 11% from the current stock price, based on a 14 times price-to-earnings ratio for 2025 and 12 times for 2026 [4]