Core Viewpoint - Longhua Chemical (301518) reported a decline in total revenue for the first half of 2025, but a significant increase in net profit, indicating improved profitability despite lower sales [1] Financial Performance - Total revenue for the first half of 2025 was 1.23 billion yuan, a decrease of 15.8% year-on-year [1] - Net profit attributable to shareholders was 41.13 million yuan, an increase of 62.71% year-on-year [1] - In Q2 2025, total revenue was 651 million yuan, down 18.52% year-on-year, while net profit was 22.43 million yuan, up 589.05% year-on-year [1] - Gross margin increased by 56.03% to 6.39%, and net margin rose by 93.1% to 3.34% [1] - Total operating expenses were 31.48 million yuan, accounting for 2.56% of revenue, an increase of 25.3% year-on-year [1] - Earnings per share rose to 0.30 yuan, a 66.67% increase year-on-year [1] Business Model and Investment Returns - The company's return on invested capital (ROIC) was 3.85% last year, indicating weak capital returns [3] - Historical median ROIC since listing is 11.46%, suggesting better investment returns in the past [3] - The company's performance is heavily reliant on capital expenditures, necessitating careful evaluation of capital projects [3] Technological Development - Longhua Chemical has signed a joint development and licensing agreement with Econic for CO2 polyether catalyst technology [4] - The company is focusing on developing CO2 polyether production processes and applications, resulting in several patented technologies [4] - The CO2 polyether products developed have improved stability and environmental benefits, aligning with national green technology initiatives [4]

Core Viewpoint - Changhua Chemical has successfully applied carbon dioxide polyether in the trial production of continuous soft foam, marking a significant technological breakthrough in the chemical industry [2][3]. Group 1: Technological Advancements - The company utilizes industrial waste CO2 as a raw material, employing low-temperature and low-pressure catalytic technology to produce carbon dioxide polyether (Carnol®) [2]. - The production process is considered internationally advanced, offering higher safety compared to existing domestic high-temperature and high-pressure methods [2]. - The resulting carbon dioxide-based foam exhibits excellent hydrolysis resistance, yellowing resistance, and mechanical properties, making it suitable for various applications in the automotive and home furnishing sectors [3]. Group 2: Project Investment and Capacity - The total investment for the carbon dioxide polyether and high-performance polyol project is approximately 586.25 million yuan, located in Lianyungang City [3]. - The project is divided into two phases, with the first phase aiming to establish production capacities of 80,000 tons/year for carbon dioxide polyether and 300,000 tons/year for polyether polyols, among others [3]. - Upon full completion, the project is expected to achieve an annual production capacity of 1.06 million tons of carbon dioxide polyether, 300,000 tons of polyether polyols, and 720,000 tons of polymer polyols [3]. Group 3: Strategic Partnerships - Changhua Chemical's carbon dioxide polyether technology is derived from Econic Technologies, a UK-based company founded by Dr. Charlotte Williams [4]. - A strategic cooperation agreement was signed between Econic Technologies and Changhua Chemical in June 2022 to promote the localized production of carbon dioxide polyether using the low-temperature and low-pressure preparation process [4].

Group 1: Company Performance - In the first half of 2025, the company focused on production, sales, R&D, and project construction, optimizing processes for efficiency [2] - The company developed new products such as the carnol® series and Hiclaim® series polyether polyols, targeting multinational corporations and the new energy vehicle sector [2] - Project construction is progressing with an emphasis on quality control and safety management, aiming for early production [2] Group 2: Industry Trends - The second half of 2024 is expected to see increased demand for polyether due to government fiscal policies promoting infrastructure, technology innovation, and green economy [2] - The rapid growth of the new energy vehicle industry is creating new opportunities for polyether applications in lightweight materials [3] - The polyether industry is anticipated to develop positively in 2025, presenting both challenges and opportunities [3] Group 3: Export and Market Impact - In 2024, the company experienced good growth in export volume, primarily to Southeast Asia, India, and Europe, focusing on home goods, footwear, and automotive seating [3] - The impact of U.S. tariffs on the company is minimal due to a small percentage of exports directed to the U.S. market [3] Group 4: Project Development - The "Carbon Dioxide Polyether and High-Performance Polyol Project" utilizes CO2 as a substitute for petrochemical materials, offering superior mechanical properties and environmental benefits [3] - The project is being constructed in phases, with the first phase of 80,000 tons/year of CO2 polyether and 300,000 tons/year of polyether polyol expected to be operational by Q4 2025 [3]