Core Viewpoint - Wanhua Chemical is undergoing a transformative year, aiming to navigate through industry cycles despite facing declining revenue and net profit in the first three quarters of 2024 [1][2]. Financial Performance - In 2024, Wanhua Chemical reported revenue of 182.07 billion yuan, a year-on-year increase of 3.83%, while net profit was 13.03 billion yuan, down 22.49% [2]. - For the first three quarters of 2025, the company achieved revenue of 144.23 billion yuan, a decrease of 2.29%, and net profit of 9.16 billion yuan, down 17.45% [2]. Quarterly Analysis - The third quarter of 2025 showed signs of recovery with revenue reaching 53.32 billion yuan, up 5.52% year-on-year, and net profit of 3.03 billion yuan, up 3.96% [3]. - In the first two quarters of 2025, revenue was 43.07 billion yuan and 47.83 billion yuan, with net profits of 3.38 billion yuan and 3.04 billion yuan respectively [3]. Business Segment Performance - The polyurethane segment saw sales volume of 4.58 million tons in the first three quarters, an increase of 11.7%, but revenue was 55.14 billion yuan, only a slight increase of 1.66% due to price fluctuations [3]. - The petrochemical segment experienced a sales volume decline of 13%, with revenue of 59.32 billion yuan, down 4.35% [3]. - Fine chemicals and new materials showed growth, with sales volume of 1.84 million tons, up 29.6%, and revenue of 23.81 billion yuan, up 19% [3]. Strategic Initiatives - Wanhua Chemical is focusing on lithium battery materials as a strategic growth area, with a new battery materials industrial park project in Yantai, Shandong, starting construction with a total investment of 16.8 billion yuan [6]. - The company aims to enhance its technological innovation in battery materials to become a leader in the industry, with plans for a full industrial chain layout in battery materials [6][7]. Shareholder Actions - The company announced a reduction in shareholding by Prime Partner International Limited to 4.98% and initiated a share buyback program, repurchasing 9.275 million shares at an average price of 53.90 yuan per share [4].

Investment Rating - The report maintains an "Outperform" rating for the company [4][11][12] Core Views - The petrochemical business is under significant pressure, leading to a downward revision of the company's EPS for 2025-2026 to 4.20/5.45/6.07 RMB, with a target price adjustment to 67.70 RMB based on a 16.12x PE for 2025 [4][11][12] - The company experienced a decline in Q4 performance, with total revenue for 2024 at 182.07 billion RMB, up 3.83% YoY, while net profit attributable to shareholders was 13.03 billion RMB, down 22.49% YoY [12][13] - The company is entering a "Year of Transformation" in 2025, focusing on management reforms to enhance organizational vitality and market expansion [12][13] Financial Summary - Total revenue projections are as follows: 175.36 billion RMB for 2023, 182.07 billion RMB for 2024, 200.01 billion RMB for 2025, 223.95 billion RMB for 2026, and 244.42 billion RMB for 2027, with respective growth rates of 5.9%, 3.8%, 9.9%, 12.0%, and 9.1% [3][5] - Net profit attributable to shareholders is projected to be 16.82 billion RMB for 2023, 13.03 billion RMB for 2024, 13.20 billion RMB for 2025, 17.10 billion RMB for 2026, and 19.07 billion RMB for 2027, reflecting a decline of 22.5% in 2024 [3][5] - The company's gross profit margin for petrochemicals was 3.52% in 2024, with a further decline to 2.31% in the second half of the year [12][13] Business Developments - The company has multiple projects nearing completion, including a second TDI project in Fujian expected to start in May 2025, increasing total TDI capacity to 1.44 million tons/year [13] - A 250,000 tons/year LDPE unit in Yantai is set to commence operations in early 2025, establishing a foundation in high-end polyolefins [13] - New materials projects, including MS and XLPE, are progressing and expected to start in 2025 [13]