Core Viewpoint - The company's Q3 2025 performance is in line with expectations, showing a significant increase in net profit despite a decline in revenue [1] Financial Performance - Q3 2025 revenue was 19.36 billion yuan, a year-on-year decrease of 14% - Net profit attributable to shareholders was 30 million yuan, a year-on-year increase of 362%, marking a turnaround from previous losses - Non-recurring net profit was 50 million yuan - For the first nine months of 2025, revenue totaled 58.9 billion yuan, with a net loss of 430 million yuan - Asset impairment losses for the first nine months were 417 million yuan, primarily due to inventory impairment [1] Industry Trends - The chemical cycle is still awaiting recovery, with polyethylene and polypropylene sales increasing by 5% year-on-year to 710,000 tons in the first nine months of 2025 - Q3 2025 sales for these products rose by 9% year-on-year to 250,000 tons, although industry price spreads remain low - The naphtha cracking margin in Q3 2025 decreased by 15% year-on-year to 221 USD/ton, and ethylene prices fell by 4% year-on-year to 831 USD/ton, indicating that product margins may take time to recover - Adjustments in refined oil structure show slight recovery in diesel sales, with total sales of diesel, gasoline, and aviation kerosene at 1.79 million tons, 2.47 million tons, and 1.03 million tons respectively for the first nine months of 2025 - The ethylene upgrading project in Shanghai is progressing well, expected to be operational by 2028, which may lead to a turning point in the industry post-2027 due to potential constraints on new capacity approvals [2] Profit Forecast and Valuation - Due to lower-than-expected chemical price spreads, the company has revised down its net profit forecasts for 2025 and 2026 by 86% and 40% to 50 million yuan and 390 million yuan respectively - The valuation remains unchanged, with target prices set at 3.3 yuan for A-shares and 1.6 HKD for H-shares, indicating potential upside of 17% and 14% - Current trading levels are at 1.2x and 0.5x P/B for 2025/26 for A and H shares respectively [3]