Summary of Conference Call Records Industry Overview - The conference call discusses the refrigerant market, particularly focusing on fluorinated refrigerants and liquid cooling technologies, highlighting the impact of quota execution and demand growth on pricing and competition within the fluorochemical industry [1][3][29]. Key Points and Arguments Market Dynamics - The refrigerant market in 2025 is expected to benefit from quota execution and increased demand, especially from appliance replacement and export needs, leading to a continuous rise in refrigerant prices since Q4 2023 [1][3]. - Current prices for major refrigerants are as follows: - R32: Export price around 59,000-60,000 RMB/ton, domestic price 62,000-62,500 RMB/ton - R134a: Export price around 48,500-49,500 RMB/ton, factory price around 50,000 RMB/ton - R227ea: Export price between 69,500-71,000 RMB/ton, domestic price between 73,000-75,000 RMB/ton [6][5]. Supply and Demand - Domestic inventory levels are reasonable, while overseas inventories, particularly in the Middle East, are high. In contrast, some products in Europe and America have low inventory levels [5][8]. - India's anti-dumping measures against Chinese HFC refrigerants impose tariffs of 1,000-2,000 USD/ton, despite India's production capacity not fully meeting its demand [1][15][16]. - The effective capacity of companies generally exceeds quotas, but some facilities face high restart costs, limiting effective production [10][11]. Regulatory Environment - China is expected to continue implementing total control and gradual reduction of HCFC and HFC quotas in 2026, aligning with national climate change strategies [2][3]. - The quota trading market in 2025 is less active but more transparent, with rising future trading costs anticipated due to limited available quotas [13][12]. Technological Developments - Liquid cooling technology is advancing, with significant demand expected in the next three years, projected to reach 10,000 tons [25][26]. - The transition from high GWP to low GWP products is becoming less favorable, with some fourth-generation alternatives unable to fully replace existing products [10][11]. Market Trends - The demand for three-generation refrigerants is increasing, with a notable growth in the maintenance market, particularly for F32 refrigerants [27][28]. - The global warming issue is driving demand for refrigerants, especially in developing countries, which is expected to sustain long-term growth in the refrigerant market [29]. Additional Important Insights - The Indian market presents significant potential despite current challenges, with major local players like SRF holding substantial market shares [9][16]. - The U.S. and Europe are actively transitioning to fourth and fifth-generation refrigerants, with companies like Arkema leading the way in production [17][18]. - China's competitive advantages in the refrigerant market include lower production costs and advanced manufacturing capabilities, despite facing trade barriers [18][19]. Conclusion - The refrigerant market is poised for growth driven by regulatory changes, technological advancements, and increasing global demand, particularly in developing regions. Companies must navigate challenges such as trade barriers and production costs while capitalizing on emerging opportunities in liquid cooling and environmentally friendly refrigerants.

Investment Rating - The report maintains an "Outperform" rating for the fluorochemical industry [5][8]. Core Views - The fluorochemical industry is experiencing a strong performance, with the industry index outperforming major stock indices in August 2025. The fluorochemical index rose by 16.75% compared to the previous month, indicating robust market dynamics [1][15]. - Main refrigerant prices are expected to continue stable growth, driven by limited supply and strong demand. The average prices for R32 and R134a are projected to rise in the coming months [2][22]. - The development of liquid cooling technology is expected to significantly boost the demand for fluorinated liquids and refrigerants, as traditional cooling methods are becoming less effective [4][62]. Summary by Sections 1. Industry Performance - As of August 29, 2025, the fluorochemical index reached 1681.54 points, up 16.75% from the end of July, outperforming the Shenwan Chemical Index by 7.77 percentage points [1][15]. 2. Refrigerant Market Review - The prices of major refrigerants are on an upward trend due to supply constraints. R32 is expected to average 62,000 CNY/ton in September to November, while R134a is projected to average 52,000 CNY/ton [2][22][24]. - Export data shows a mixed performance, with R32 exports increasing by 13% year-on-year, while R22 exports decreased by 34% [35]. 3. Liquid Cooling Demand - The rise of AI technology and increased server power density are driving the shift towards liquid cooling solutions, which are more efficient than traditional air cooling methods. This trend is expected to enhance the demand for fluorinated liquids and refrigerants [4][62][66]. 4. Regulatory Environment - China's commitment to the Montreal Protocol includes significant reductions in HCFCs and HFCs production and usage, which will impact the refrigerant market dynamics positively in the long term [71][74]. 5. Key Companies and Investment Recommendations - Companies such as Juhua Co., Dongyue Group, and Sanmei Co. are highlighted as key players in the fluorochemical sector, with strong growth prospects due to their leading positions in refrigerant quotas and advanced technologies [4][8][70].

Investment Rating - The report maintains a "Buy" rating for the company, expecting the stock price to outperform the industry index by more than 15% in the next six months [4][18]. Core Views - The company's performance in the first half of 2025 shows significant growth, driven by rising refrigerant prices, with a year-on-year revenue increase of 38.58% and a net profit increase of 159.22% [1][2]. - The overall market for refrigerants is expected to remain tight, with prices likely to continue rising due to the gradual consumption of production quotas and seasonal demand increases [8][10]. Financial Performance Summary - Revenue projections for the company are as follows: 2025E at 6,294 million yuan, 2026E at 7,172 million yuan, and 2027E at 8,011 million yuan, reflecting growth rates of 55.8%, 14.0%, and 11.7% respectively [1][10]. - The net profit is projected to reach 2,108 million yuan in 2025E, with a growth rate of 170.8%, followed by 2,615 million yuan in 2026E and 3,068 million yuan in 2027E [1][10]. - The company's return on equity (ROE) is expected to improve significantly, reaching 25.1% in 2025E, 24.1% in 2026E, and 22.3% in 2027E [1][10]. Product Performance Summary - In the first half of 2025, the company reported revenues from refrigerants, foam agents, and hydrogen fluoride of 2,419 million yuan, 98 million yuan, and 276 million yuan respectively, with year-on-year growth rates of 46.59%, 15.33%, and 1.80% [2]. - The average selling prices for refrigerants, foam agents, and hydrogen fluoride were 39,000 yuan/ton, 22,700 yuan/ton, and 8,500 yuan/ton respectively, showing year-on-year increases of 56.53%, 36.87%, and 11.79% [2]. Industry Outlook Summary - The refrigerant market is currently in a tight balance, with prices expected to remain high due to ongoing supply constraints and seasonal demand spikes [8][10]. - The company is advancing multiple projects aimed at enhancing its integrated fluorochemical industry chain, which is expected to further strengthen its market position [9][10].

Group 1 - Fluorine is a highly reactive chemical element widely found in various organic and inorganic compounds, with fluorinated refrigerants being a significant branch of organic fluorine products [2] - The fluorochemical industry chain starts with fluorite, a strategic mineral resource in China, which has seen tightened domestic policies leading to a shift from a net exporter to a net importer since 2018, with net imports expected to reach 1.1 million tons in 2024, a year-on-year increase of 72% [2] - The price of fluorite has shown a long-term upward trend due to strengthened mining regulations, which directly impacts the cost structure of downstream fluorinated compounds [2] Group 2 - The first generation of refrigerants has been globally phased out due to significant damage to the ozone layer, while the second generation, which has a relatively lower impact, is also being phased out in developed countries and is subject to quota production in China, leading to continuous reductions [3] - According to the Ministry of Ecology and Environment, the production quota for second-generation refrigerants has decreased from 426,000 tons in 2013 to 164,000 tons by 2025, with R22 accounting for the highest share at 91% of the total quota, making it the mainstream product among second-generation refrigerants [4]

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The refrigerant industry is experiencing a high level of prosperity, with the company's performance expected to continue its strong growth [6] - The profitability of fluoropolymer materials is gradually recovering, driven by increased production and improved market conditions [6] Financial Performance Summary - In 2024, the company achieved operating revenue of 4.61 billion yuan, a year-on-year increase of 5.4%, and a net profit attributable to shareholders of 250 million yuan, up 36.8% year-on-year [4][7] - The company's Q4 2024 results showed operating revenue of 1.23 billion yuan, a year-on-year increase of 7.6%, and a net profit of 105 million yuan, up 385% year-on-year [5] - For Q1 2025, the company reported operating revenue of 1.14 billion yuan, a year-on-year increase of 12.4%, and a net profit of 97 million yuan, up 161.7% year-on-year [10] Product Segment Performance - In the fluorocarbon chemical segment, the company generated revenue of 2.447 billion yuan in 2024, with an average gross margin of 20.37%, up 12.62 percentage points year-on-year [7][9] - The fluoropolymer materials segment achieved revenue of 1.581 billion yuan in 2024, reflecting a year-on-year increase of 17.38% [7][9] - The chemical raw materials segment saw a revenue decline to 436 million yuan in 2024, with a significant drop in average selling price [9] Future Projections - The company is projected to achieve operating revenues of 5.012 billion yuan, 5.433 billion yuan, and 5.853 billion yuan for 2025, 2026, and 2027 respectively, with net profits of 491 million yuan, 589 million yuan, and 680 million yuan [11][13] - The expected price-to-earnings ratios for the next three years are 20, 17, and 15 times [11]