Core Viewpoint - Satellite Chemical's Q1 2025 performance met expectations, with significant year-on-year growth in revenue and net profit, driven by new capacity releases and rising product prices [2][3][4]. Financial Performance - In Q1 2025, the company achieved revenue of 12.329 billion yuan, a year-on-year increase of 40.03%, and a net profit of 1.568 billion yuan, up 53.38% year-on-year, aligning with performance forecasts [2]. - The company's gross margin for Q1 2025 was 21.68%, showing a slight year-on-year increase of 0.02 percentage points, despite a quarter-on-quarter decline of 5.43 percentage points [3]. Capacity Expansion and Market Position - The company is positioned as a leading player in the domestic light hydrocarbon cracking sector, with multiple projects set to launch in 2025 and 2026, which are expected to significantly boost performance [4]. - New capacity releases in the second half of 2024 are anticipated to contribute positively to revenue and profit growth [3][4]. Product Pricing and Cost Factors - The increase in prices for acrylic acid and esters has enhanced profitability in the C3 industry chain, contributing to overall performance growth [3]. - The impact of ethane tariffs is expected to diminish, with a planned reduction in import tariffs from 2% to 1% by the end of 2024, which will alleviate cost pressures on the C2 industry chain [4]. Profit Forecasts - The company revised its profit forecasts, expecting net profits of 6.3 billion yuan, 7.5 billion yuan, and 9.1 billion yuan for 2025, 2026, and 2027 respectively, reflecting year-on-year growth of 4%, 18%, and 21% [5]. - The current A-share price corresponds to a low PE ratio of 9, 8, and 6 for the years 2025, 2026, and 2027, indicating potential for investment [5].

1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints of the Report - This week, the price of FEI at the bottom rebounded significantly, with high - level exports from the Middle East and medium - low - level exports from Russia. The East - West arbitrage logistics remained stable, and the overall supply of naphtha was stable. The impact of US naphtha on the Asian market was limited. The demand for naphtha decreased due to the increased propane procurement in Japan and South Korea, and the FEI - MOPJ spread rebounded significantly. The cracking profit of naphtha dropped to an extremely low level year - on - year, and the negative feedback of cracking units was expected to be delayed [8]. - For ethylene, whether the tariff is maintained or not, it has a limited impact on the domestic and Asian ethylene markets. The upstream and downstream are basically matched, and the expected supply - demand reduction of affected units can be compensated by imports to some extent. The actual gap will be balanced by the negative feedback of downstream demand [8]. - In the case of no tariff impact, the Asian ethylene cracking balance sheet shows a structural gap. After the partial restart of Southeast Asian units this week, the balance sheet tightened slightly in April, but the overall gap is still equivalent to the maintenance volume of 1 - 2 ethylene cracking units. After the US dollar price of ethylene actively declined this week and the profit was compressed by the strengthening of naphtha, the future dynamic balance is expected to deteriorate [86]. - Under the continuous impact of tariffs, the demand for Asian naphtha will increase in the near - term. However, due to the improved economic efficiency of propane for Japanese and South Korean factories, the degree of propane substitution in these factories will gradually increase. Eventually, the market will return to the supply - demand situation of cracking units [87]. 3. Summary According to the Directory 3.1 Naphtha Part 3.1.1 Price and Spot - The price of naphtha in Asia strengthened this week, and the cracking profit dropped to a year - on - year low. The spot market was tight at the end of the month, but the willingness of factories to stock up in the future decreased due to the rapid decline in ethylene cracking profit [10][11]. - The naphtha premium fluctuated this week, and the monthly spread structure changed little. The global naphtha price difference showed that the European support was relatively strong, and the East - West spread was repaired month - on - month [12][16]. - The overseas gasoline cracking spread rebounded this week, showing seasonal characteristics. The EIA data was optimistic, with a significant reduction in refined oil inventories in the US and a rapid decline in gasoline inventories. The European inventory remained high [18][21]. - The export quota of refined oil in 2025 changed, with a decrease in general trade quota and an increase in processing trade quota. The overall export plan of refined oil in April remained stable, with low exports of gasoline and diesel and high exports of jet fuel [26]. - The price difference between gasoline and naphtha in Europe and the US remained stable, and both gasoline and naphtha strengthened this week [27]. 3.1.2 Valuation - The global naphtha cracking spread strengthened this week, but the downstream profit weakened rapidly. Attention should be paid to the decline after the end of the pricing cycle [41]. - The Asian ethylene cracking profit declined significantly this week, and the FEI cracking profit declined year - on - year, but the substitution economy of Japan and South Korea was still better than that of naphtha [47]. - The Asian aromatics profit declined rapidly, while the change in Europe and the US was not significant month - on - month [59]. - The overseas refinery profit rebounded this week, while the domestic refinery profit continued to decline [64]. 3.1.3 Supply and Demand Balance - In terms of supply, the exports from major regions such as the Middle East, Russia, and the US changed little this week. The global CDU maintenance changed little week - on - week [66][67]. - In terms of demand, the substitution economy of propane raw materials in Japan and South Korea increased, and the demand for naphtha from CDU decreased [74]. - In the balance sheet, under the assumption of tariff mitigation, the Asian ethylene cracking balance sheet has a structural gap; under the assumption of continuous tariffs, the near - term demand for Asian naphtha will increase, but the substitution of propane will gradually increase [86][87]. 3.2 Ethylene Part 3.2.1 Global Capacity and Logistics - In 2025, the growth of global ethylene cracking capacity is mainly concentrated in China, while the capacity in other regions remains basically unchanged [107]. - Asia is the main pricing area. Japan and South Korea are exporters in Asia, while China and Chinese Taipei are importers. The US exports ethylene to Northeast Asia and Southeast Asia, and Europe has a net export of 3 - 4 million tons [109]. 3.2.2 Price and Profit - The price of ethylene in the domestic market remained stable this week, and the import profit increased. The downstream profit of ethylene derivatives was differentiated, with the profit of ethylene glycol and styrene weakening, while the profit of plastics remained stable and the profit of ethylene oxide remained high [110][115]. - The overseas downstream profit of ethylene derivatives remained at a relatively high level, and the overall chemical profit in Europe and the US was healthy [122]. 3.2.3 Supply and Demand Balance - This week, the maintenance of Asian ethylene cracking units changed little. Attention should be paid to the possible delayed restart and additional maintenance of Asian cracking units in May after the consumption of cheap raw materials and in a loss state [75][130]. - The domestic downstream production capacity of ethylene will increase in 2025, with significant growth in the production capacity of plastics, ethylene glycol, styrene, and other products [131].