Core Viewpoint - The global chemical industry is undergoing significant transformation, with China rapidly rising to dominate the market while Europe faces declining competitiveness and substantial operational challenges [3][4][7]. Group 1: Global Chemical Industry Landscape - In 2023, global chemical sales reached €5.2 trillion, with China accounting for €2.2 trillion, representing a 43% market share, an increase of 9 percentage points over the past decade [9]. - The EU remains the second-largest chemical market, but its share has decreased from 16% in 2013 to 13% in 2023 [9]. - The trend of "East rising, West declining" is evident, making investment in China a consensus choice among global investors [17]. Group 2: European Chemical Industry Challenges - The chemical sector is a cornerstone of the European economy, with a trade surplus of €52 billion in 2023, but is now under severe pressure due to rising energy costs and regulatory burdens [25][29]. - The conflict in Ukraine has led to soaring natural gas prices, significantly impacting the competitiveness of European chemical producers [34]. - Approximately 11 million tons of chemical production capacity in Europe has been permanently shut down in recent years, with ongoing indications of further closures [50]. Group 3: China's Chemical Industry Growth - China's chemical production capacity continues to expand, with the country leading in basic chemical raw materials and rapidly growing in fine chemicals [4][61]. - In 2024, China's total chemical industry output is projected to reach ¥16.3 trillion, accounting for about 12% of the national industrial output [57]. - China is expected to produce over half of the world's chemical products by 2030, with capital expenditures and R&D investments leading globally at 46% and 32%, respectively [17][81]. Group 4: Investment Trends and Strategic Shifts - European chemical companies are increasingly investing in China, with BASF committing €10 billion to build an integrated production base in Zhanjiang [89]. - The shift in investment focus from Europe to Asia is evident, with major companies like BASF and INEOS adjusting their strategies to enhance competitiveness in the Chinese market [54][89]. - Cross-national companies are establishing R&D centers in China to better align with local market demands and leverage China's growing innovation capabilities [94].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 18.48 CNY, based on a 21X valuation of the estimated EPS for 2025-2027 [3][5]. Core Insights - The company is focusing on continuous investment in core businesses and innovation to enhance operational quality. The precious metals business includes manufacturing, recycling, and trading, with a significant portion of revenue coming from recycling and trading, which has lower profitability [8]. - The new materials manufacturing segment is expected to contribute significantly to profitability, with a projected 30% of revenue contributing to 56% of gross profit in 2024. The company is investing in high-margin projects, including a catalyst production line, to further enhance profitability [8]. - The global shift in the chemical industry is anticipated to benefit the company's catalyst business, as production capacity is expected to increase significantly, allowing the company to capture growing domestic demand for high-margin products [8]. Financial Summary - Revenue is projected to grow from 45,086 million CNY in 2023 to 65,789 million CNY in 2027, with a compound annual growth rate (CAGR) of approximately 8.3% [4]. - Net profit attributable to the parent company is expected to increase from 468 million CNY in 2023 to 825 million CNY in 2027, reflecting a CAGR of about 8.2% [4]. - The EPS is forecasted to rise from 0.62 CNY in 2023 to 1.08 CNY in 2027, indicating a steady growth trajectory [4].