Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, but showed signs of recovery in Q2 due to improved refining and polyester filament margins [4][5]. Group 1: Financial Performance - In H1 2025, the company achieved revenue of 55.96 billion yuan, a year-on-year decrease of 13.6%, and a net profit attributable to shareholders of 230 million yuan, down 47.3% year-on-year [4]. - In Q2 2025, the company recorded revenue of 28.79 billion yuan, a year-on-year decline of 13.0% but a quarter-on-quarter increase of 6.0%. The net profit for Q2 was 175 million yuan, showing a significant year-on-year increase of 953.9% and a quarter-on-quarter increase of 240.2% [4]. Group 2: Market Conditions - The average Brent crude oil price in Q2 2025 was $66.76 per barrel, down 22% year-on-year and 11% quarter-on-quarter. The naphtha cracking margin was -50 yuan/ton, up 19 yuan/ton year-on-year and 20 yuan/ton quarter-on-quarter [5]. - The refining margin was 1,111 yuan/ton, an increase of 420 yuan/ton year-on-year and 158 yuan/ton quarter-on-quarter, indicating improved profitability in refining operations [5]. Group 3: Regional Market Dynamics - The Southeast Asian refined oil supply-demand gap is expected to continue expanding, with a projected shortfall of 68 million tons by 2026 due to the exit of over 30 million tons of refining capacity from the market between 2020 and 2023 [6][7]. - The company has established a refining capacity of 8 million tons per year through its Brunei refining project, which is expected to benefit from the tightening supply-demand dynamics in the region [6][7]. Group 4: Product Development and Strategy - The company has a total polyester production capacity of 13.25 million tons per year, with a focus on differentiated high-value products. The proportion of differentiated fiber production has increased to 27% in H1 2025 [8]. - The company is accelerating the development of biodegradable fibers and other high-value products, aiming to lead technological advancements in the fiber industry towards low-carbon and circular economy practices [8].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company experienced a significant recovery in Q2 2025, with a notable increase in net profit compared to the previous quarter, driven by improved refining and polyester filament price spreads [4][7] - The company is accelerating its layout of high-value differentiated products, with a focus on biodegradable fibers and other high-margin products, positioning itself for future growth [6][7] - The Brunei refining project is expected to benefit from the expanding supply-demand gap in the Southeast Asian refined oil market, enhancing the company's competitive advantage [5][7] Summary by Sections Financial Performance - In H1 2025, the company achieved operating revenue of 55.96 billion yuan, a year-on-year decrease of 13.6%, and a net profit attributable to shareholders of 230 million yuan, down 47.3% year-on-year. In Q2 alone, revenue was 28.79 billion yuan, down 13.0% year-on-year but up 6.0% quarter-on-quarter, with a net profit of 175 million yuan, a year-on-year increase of 953.9% and a quarter-on-quarter increase of 240.2% [3][4] Market Conditions - The average Brent crude oil price in Q2 2025 was $66.76 per barrel, down 22% year-on-year and 11% quarter-on-quarter. The price spread for refining improved significantly, indicating a recovery in the company's performance despite a challenging market environment [4] Growth Prospects - The company has a total polyester production capacity of 13.25 million tons per year, with a focus on differentiated products. The proportion of differentiated fiber production has increased to 27%, leading the industry [6] - The Southeast Asian refined oil market is projected to face a supply-demand gap of 68 million tons by 2026, which the company is well-positioned to exploit through its Brunei refining project [5][7] Profit Forecast and Valuation - The profit forecasts for 2025-2027 have been adjusted downward due to the declining industry outlook, with expected net profits of 580 million yuan, 764 million yuan, and 965 million yuan respectively. The report maintains a positive outlook on the company's future growth potential [7][8]