Investment Rating - Industry investment rating: Stronger than the market, maintained [1] Core Views - Focus: Expectations for marginal improvement in PX and PTA supply and demand this year. The price spread between PX (China main port) and naphtha (Japan) has started to decline, recorded at 326.08 USD/ton on the 15th, with attention on the potential for the price spread to strengthen again. Geopolitical influences from Iran have led to a risk premium in oil pricing this week [2] - Review: The performance of the oil and petrochemical index was average this week, with a decrease of 0.27% compared to last week. Among the sub-indices, oilfield services performed the best within the oil and petrochemical sector, with an increase of 1.63% [5][3] - Oil: Crude oil prices increased; US crude oil inventories rose while gasoline inventories fell [6][10] - Polyester: The price of polyester filament remained stable; inventory days for different varieties of polyester filament in Jiangsu and Zhejiang varied, with a decrease in weaving machine operating rates [13][20] - Olefins: Sample PE spot prices increased, while petrochemical inventories of polyolefins decreased [23][24] Summary by Sections Upstream - If geopolitical factors lead to a future oil premium, it will benefit upstream targets [2] Midstream (Refining) - An improvement in demand and progress in eliminating outdated production capacity will benefit midstream refining [2] Polyester Filament - Attention on the progress of PTA's internal competition and PX profit recovery; if successful, it will benefit polyester filament [2] Oil Market - Brent crude oil futures and TTF natural gas futures closed at 64.47 USD/barrel and 37.66 EUR/MWh, respectively, with increases of 1.6% and 32.1% compared to last week [7] Polyester Market - The latest data shows stable prices for polyester filament, with POY, DTY, and FDY prices at 6550, 7750, and 6800 CNY/ton, respectively, with price spreads increasing by 24 CNY/ton [15][21] Olefins Market - The sample PE price was 6920 CNY/ton, up 0.29% from last week, while petrochemical inventories of polyolefins decreased to 490,000 tons, down 80,000 tons from the previous week [26]

Core Viewpoint - The A-share market showed mixed performance with significant gains in the basic chemical, electric equipment, and automotive sectors, while the Hong Kong market experienced a decline in major indices [1][2][7]. A-share Market Performance - The basic chemical sector led the gains with an increase of over 2%, featuring stocks like Li Er Chemical (002258), Evergrande High-tech (002591), and Double Star New Materials (002585) hitting the daily limit [2][3]. - Electric equipment stocks also surged, with the sector's increase exceeding 2%, and notable performers included Shuangjie Electric (300444) and Taisheng Wind Power (300129), both showing gains of over 10% [4]. - The automotive sector saw a rise close to 2%, with stocks such as Superjet (301005) and Kabeiyi (300863) achieving gains exceeding 10% [5]. Hong Kong Market Performance - The Hong Kong market was generally sluggish, with the Hang Seng Index and Hang Seng Technology Index both dropping over 1% [7]. - Notable gainers included companies like Li Ning and Mengniu Dairy, while WuXi Biologics and Innovent Biologics faced significant declines [8]. - The stock of Qutoutiao surged over 20% following a positive earnings forecast, projecting a turnaround to profitability in 2025 [9][10]. Company-Specific Highlights - Qutoutiao expects a net profit between RMB 270 million and RMB 330 million for 2025, driven by increased investment in AI and operational efficiency improvements [10]. - TCL Electronics anticipates a significant increase in adjusted net profit for 2025, projected between HKD 2.33 billion and HKD 2.57 billion, representing a growth of 45% to 60% compared to 2024 [11].

Core Viewpoint - The market is witnessing a strong performance in the free cash flow index, with significant gains in related sectors, particularly in cyclical industries, driven by recent positive developments in the automotive and transportation sectors [1][2]. Group 1: Free Cash Flow Index Performance - The CSI Free Cash Flow Index (932365) increased by 1.08%, with notable gains from stocks such as Xinhua Department Store (+9.99%), Zhongmin Energy (+9.93%), and Pinggao Electric (+9.76%) [1]. - The Free Cash Flow ETF (159233) rose by 1.28%, closing at 1.26 yuan, and is designed to track the CSI Free Cash Flow Index, focusing on cyclical industries [1]. Group 2: Automotive Sector Developments - A new electric vehicle quota agreement between China and Canada is expected to accelerate the entry of Chinese electric vehicles into the North American market, with a reduction in tariffs from 100% to 6.1% for a quota of 49,000 vehicles annually [1]. - The China Automobile Association projects that vehicle exports will reach 7.4 million units by 2026, reflecting a year-on-year growth of 4.3% [1]. Group 3: Transportation Sector Insights - The 2026 Spring Festival travel season is set to begin on February 2, with an expected 539 million passengers, marking a 5.0% increase year-on-year, which will boost demand in the transportation sector [2]. - The Spring Festival is anticipated to enhance profitability across various transportation segments, including railways, civil aviation, and logistics, leading to improved cash flow stability for transportation companies [2].

Group 1 - The Petrochemical ETF (159731) has seen a rise of 1.79% as of January 19, with significant gains from holdings such as Yara International, Haohua Technology, and Hualu Hengsheng [1] - The Petrochemical ETF has experienced net inflows for eight consecutive trading days, totaling 269 million yuan, with its latest share count reaching 549 million and total scale hitting 522 million yuan, both marking new highs since inception [1] - Dongwu Securities highlights four major investment directions for the chemical industry by 2026, including dividend strategies focusing on China National Offshore Oil Corporation, China Petroleum, and Sinopec [1] Group 2 - The Petrochemical ETF and its linked funds closely track the CSI Petrochemical Industry Index, with the basic chemical industry accounting for 59.23% and the oil and petrochemical industry for 32.60% of the index [2] - The chemical industry cycle is expected to accelerate its reversal as supply-side measures continue to reduce capacity and promote domestic demand in the context of the "14th Five-Year Plan" [2]

Core Insights - The report highlights that the A-share market is currently experiencing a phase of regulatory adjustments aimed at controlling excessive market enthusiasm while ensuring sustainable growth [8][9][10] - It emphasizes the importance of the AI technology revolution and the trend of de-globalization, which are expected to persist for the next 5-10 years, creating investment opportunities in related sectors [9][10][22] - The report suggests that the Chinese economy is in a transition phase, benefiting from a unified market policy and a low-interest-rate environment, which may lead to increased foreign capital inflows into RMB assets [10][12] Market Overview - The A-share market saw a significant trading volume of 3.99 trillion yuan on January 14, marking a historical high, but subsequently retreated to around 3 trillion yuan, indicating a cooling of market exuberance [8][9] - The report notes that the recent increase in the financing margin ratio from 80% to 100% by the regulatory authority reflects a counter-cyclical adjustment strategy [8][9] Investment Opportunities - The report recommends focusing on investment opportunities in commodities such as copper, rare earths, and gold, which are expected to gain value amid geopolitical tensions and the ongoing trend of de-globalization [10][18][20] - It also points out that the rapid development of AI is likely to drive demand for computing power and related infrastructure, benefiting sectors like new energy vehicles and resource materials [22][24] Economic Trends - The report anticipates that the global economy will continue to experience a loose monetary policy environment, with fiscal expansions expected in major economies, which may further enhance liquidity and support resource sectors [20][22] - Historical data indicates that periods of RMB appreciation are often accompanied by significant foreign capital inflows into Chinese assets, suggesting a favorable outlook for the A-share market [10][12]

Investment Rating - The report rates the chemical industry as "Outperform" [2] Core Views - The report highlights the recent slight increase in international oil prices and the rise in prices of butadiene and propylene oxide, suggesting a focus on undervalued leading companies in the industry and the impact of "anti-involution" on supply in related sub-industries [2][9] - It emphasizes the strong downstream demand and the increasing importance of self-sufficiency in electronic materials and certain new energy materials companies amid a backdrop of price increases [2][9] - The report recommends a mid-to-long-term investment strategy focusing on policy support for demand recovery, continuous supply-side optimization, and the growth potential of emerging sectors such as semiconductor materials, OLED materials, and new energy materials [2][9] Industry Dynamics - As of January 18, the TTM price-to-earnings ratio for the SW basic chemical sector is 14.68, at the 59.64 percentile historically, while the price-to-book ratio is 1.54, at the 40.20 percentile historically [2][13] - The SW oil and petrochemical sector has a TTM price-to-earnings ratio of 13.44, at the 39.81 percentile historically, and a price-to-book ratio of 1.30, at the 41.38 percentile historically [2][13] - The report notes that since 2025, the industry has been significantly affected by tariff-related policies and fluctuations in oil prices [2][13] Price Trends - In the week of January 12-18, 49 out of 100 tracked chemical products saw price increases, while 20 experienced declines, and 31 remained stable [9][32] - The average price of butadiene increased to 9,663 CNY/ton, up 4.04% week-on-week and 25.98% month-on-month [34] - The average price of propylene oxide rose to 8,620 CNY/ton, up 8.84% week-on-week and 9.88% year-on-year [35] Recommendations - The report recommends investing in leading companies such as Wanhua Chemical, Hualu Hengsheng, and Yake Technology, among others, while suggesting to pay attention to companies like Yangnong Chemical and Tongcheng New Materials [2][13]

Investment Rating - The report maintains a "Strong Buy" rating for the oil and petrochemical sector [1]. Core Viewpoints - The uncertainty in the Middle East has increased, leading to a short-term strong fluctuation in oil prices. WTI crude futures closed up by 1.02% and Brent oil futures by 1.87% during the week of January 9 to January 16, 2026 [6]. - Geopolitical tensions, particularly involving Iran and the U.S., are significant factors affecting oil prices. Iran's oil inventory has reached record levels, equivalent to about 50 days of production, due to Western sanctions [6]. - The fluorochemical sector is expected to maintain high prosperity due to supply quota constraints and favorable demand driven by policy support. The production quota for HFCs in 2026 has increased by 5,963 tons year-on-year [6]. Summary by Sections Oil and Petrochemical - The report highlights the increased uncertainty in the Middle East, which is likely to impact oil prices in the short term. The geopolitical situation, including U.S. sanctions and military movements, is a critical factor [6][7]. - The report notes that domestic oil companies are diversifying their oil sources and integrating upstream and downstream operations to mitigate the impact of volatile international oil prices [7]. Fluorochemical - The fluorochemical sector is experiencing a favorable environment due to supply constraints and policy-driven demand. The production quotas for HFCs have been adjusted, with significant increases in specific categories [6][7]. - The report indicates that the demand for refrigerants is expected to grow, supported by national subsidy policies, with production of household air conditioners projected to increase by 11% year-on-year in January 2026 [6]. Semiconductor Materials - The semiconductor materials sector is on an upward cycle, with improving fundamentals and domestic substitution trends. The report suggests that there is potential for further price increases in this sector [7].

Report Overview - Report Title: Crude Oil Weekly Report: International Oil Prices Fluctuated and Rose Supported by Concerns over Iranian Supply - Report Date: January 18, 2026 - Chief Analyst: Chen Shuxian, CFA - Analyst: Zhou Shaowen 1. Report Industry Investment Rating No industry investment rating information is provided in the report. 2. Report Core View The report mainly presents the weekly data of crude oil and refined oil in the United States, including prices, inventories, production, demand, and import and export volumes. It also provides the performance and valuation of related listed companies, and recommends a number of oil - related companies [2][3]. 3. Summary by Directory 3.1 Crude Oil Weekly Data Briefing - **Upstream Key Company Performance**: The report shows the recent performance of upstream key companies such as CNOOC, PetroChina, and Sinopec, including stock price changes in the past week, month, quarter, year, and year - to - date. It also provides the valuation of these companies, including total market value, net profit attributable to the parent company, P/E ratio, and P/B ratio [8]. - **Crude Oil Market**: Brent and WTI crude oil futures had average weekly prices of $64.8 and $60.3 per barrel respectively, up $3.2 and $2.6 from the previous week. The total US crude oil inventory, commercial crude oil inventory, strategic crude oil inventory, and Cushing crude oil inventory were 8.4 billion, 4.2 billion, 4.1 billion, and 0.2 billion barrels respectively, with a week - on - week increase of 361, 339, 21, and 75 barrels. US crude oil production was 13.75 million barrels per day, down 60,000 barrels per day week - on - week. The number of active US crude oil rigs was 410, up 1 week - on - week, and the number of active fracturing fleets was 156, up 4 week - on - week. US refinery crude oil processing volume was 16.96 million barrels per day, up 50,000 barrels per day week - on - week, and the refinery operating rate was 95.3%, up 0.6 percentage points week - on - week. US crude oil imports, exports, and net imports were 7.09 million, 4.31 million, and 2.79 million barrels per day respectively, up 750,000, 40,000, and 710,000 barrels per day week - on - week [2][8]. - **Refined Oil Market**: The average weekly prices of US gasoline, diesel, and jet fuel were $76, $92, and $89 per barrel respectively, with a week - on - week change of +$3.0, +$3.5, and -$5.1. The inventory of US gasoline, diesel, and jet fuel was 250 million, 130 million, and 40 million barrels respectively, with a week - on - week change of +8.98 million, -30,000, and -890,000 barrels. The production of US gasoline, diesel, and jet fuel was 9.03 million, 5.3 million, and 1.85 million barrels per day respectively, with a week - on - week change of +30,000, -20,000, and -20,000 barrels. The consumption of US gasoline, diesel, and jet fuel was 8.3 million, 4.1 million, and 1.88 million barrels per day respectively, with a week - on - week change of +130,000, +900,000, and +180,000 barrels. The import, export, and net export of US gasoline were 130,000, 860,000, and 730,000 barrels per day respectively, with a week - on - week change of +30,000, -110,000, and -130,000 barrels. Similar data is also provided for diesel and jet fuel [2][9]. - **Oil Service Market**: The average weekly daily rates of self - elevating offshore drilling platforms and semi - submersible offshore drilling platforms remained unchanged week - on - week, month - on - month, and quarter - on - quarter [9]. 3.2 This Week's Petroleum and Petrochemical Sector Market Review - **Petroleum and Petrochemical Sector Performance**: The report presents the performance of the petroleum and petrochemical sector, including the sector's overall performance and the performance of its sub - industries. However, specific numerical data is not fully presented in the provided text [11]. - **Listed Company Performance in the Sector**: The report shows the stock price changes of upstream companies in the sector, including CNOOC, PetroChina, Sinopec, and other companies, in the past week, month, quarter, year, and year - to - date. It also provides the valuation of these companies, including total market value, net profit attributable to the parent company, P/E ratio, and P/B ratio [22][23]. 3.3 Crude Oil Sector Data Tracking - **Crude Oil Price**: The report shows the prices of various crude oils such as Brent, WTI, Russian Urals, and Russian ESPO, as well as their price differences. It also analyzes the relationship between the US dollar index, LME copper price, and WTI crude oil price [8][9]. - **Crude Oil Inventory**: It presents the inventory data of US crude oil, including total inventory, commercial inventory, strategic inventory, and Cushing inventory, and analyzes the relationship between US commercial crude oil inventory and oil prices [8][41]. - **Crude Oil Supply**: It shows the production data of US crude oil, including production volume, the number of drilling rigs, and the number of fracturing fleets, and analyzes the relationship between the number of drilling rigs, fracturing fleets, and oil prices [8][60]. - **Crude Oil Demand**: It presents the crude oil processing volume and operating rate of US refineries, as well as the operating rates of Chinese local and major refineries [8]. - **Crude Oil Import and Export**: It shows the import, export, and net import data of US crude oil and petroleum products [8]. 3.4 Refined Oil Sector Data Tracking - **Refined Oil Price**: It analyzes the relationship between international oil prices and domestic gasoline, diesel, and jet fuel prices, and presents the prices and price differences of refined oils in different regions such as the US, Europe, and Singapore [9][91]. - **Refined Oil Inventory**: It shows the inventory data of US and Singapore gasoline, diesel, and jet fuel [9]. - **Refined Oil Supply**: It presents the production data of US gasoline, diesel, and jet fuel [9]. - **Refined Oil Demand**: It shows the consumption data of US gasoline, diesel, and jet fuel, as well as the number of airport security checks of US passengers [9][150]. - **Refined Oil Import and Export**: It shows the import, export, and net export data of US gasoline, diesel, and jet fuel [9]. 3.5 Oil Service Sector Data Tracking The report presents the average daily rates of self - elevating and semi - submersible offshore drilling platforms [9]. 3.6 Related Listed Companies - **Recommended Companies**: CNOOC/China National Offshore Oil Corporation (600938.SH/0883.HK), PetroChina/PetroChina Company Limited (601857.SH/0857.HK), Sinopec/China Petroleum & Chemical Corporation (600028.SH/0386.HK), CNOOC Energy Technology & Services Limited (601808.SH), Offshore Oil Engineering Co., Ltd. (600583.SH), CNOOC Development Co., Ltd. (600968.SH) [3]. - **Companies to Watch**: Sinopec Oilfield Service Corporation (600871.SH/1033.HK), China Petroleum Engineering & Construction Corporation (600339.SH), Sinopec Machinery Co., Ltd. (000852.SZ) [3].

Investment Rating - The report maintains a "Buy" rating for the following companies: China National Petroleum Corporation (PetroChina), China National Offshore Oil Corporation (CNOOC), Sinopec Limited, Zhongman Petroleum, and New Natural Gas [2][3]. Core Insights - The report highlights that geopolitical tensions, particularly between the US and Iran, are driving oil prices to fluctuate within a narrow range, with a slight increase observed in the past week. The market is currently facing concerns over supply surplus, which is expected to dominate oil price movements in the short term [7][10]. - The report suggests three main investment themes: 1. Focus on industry leaders with stable performance and high dividends, specifically PetroChina and Sinopec. 2. CNOOC is recommended due to its low production costs and consistent output growth, which enhances earnings certainty. 3. New Natural Gas and Zhongman Petroleum are highlighted for their growth potential in production, supported by domestic policies encouraging oil and gas exploration [12][13]. Summary by Sections 1. Weekly Insights - The report discusses the impact of the US-Iran situation on oil prices, noting a slight increase in Brent crude prices to $64.13 per barrel, up 1.25% week-on-week, and WTI prices at $59.44 per barrel, up 0.54% [11][12]. 2. Market Performance - As of January 16, the oil and petrochemical sector saw a slight decline of 0.4%, while the broader market (CSI 300) fell by 0.6%. The report notes that the petrochemical sector outperformed the CSI 300 index [15][17]. 3. Industry Dynamics - The report outlines various geopolitical events affecting oil supply, including disruptions in Kazakhstan and developments in Venezuela's oil production. It also mentions the expected oil production figures from Azerbaijan for 2025 [24][25]. 4. Company Performance - The report lists the top-performing companies in the petrochemical sector, with Bohai Chemical leading with a 15.54% increase, while Shengtong Energy experienced the largest decline at 14.94% [21][22]. 5. Oil and Gas Price Tracking - The report provides detailed tracking of oil and gas prices, indicating fluctuations in both futures and spot prices. For instance, NYMEX natural gas futures closed at $3.11 per million British thermal units, down 1.02% week-on-week [50][51].

Market Overview - In 2025, global stock markets experienced a broad rally, with emerging markets significantly outperforming developed markets. The MSCI Emerging Markets Index rose by 31%, while the MSCI Developed Markets Index increased by 19%. US stocks lagged behind globally [4][10] - The technology sector led the market, driven by the AI wave, followed by cyclical stocks, while energy and consumer sectors underperformed due to weak global demand [4][10] Core Themes - The three key investment themes for 2026 that will impact global and A-share markets are: 1. Continued liquidity easing globally, providing funding support for market investments 2. Sustained AI investment as a core driver for the technology sector 3. A potential recovery in global manufacturing, boosting high-end manufacturing sectors [15][16] A-share Market Analysis - The bull market is expected to continue, with the Shanghai Composite Index surpassing 4000 points. Valuations are not in bubble territory, and as long as earnings materialize and liquidity narratives remain unchanged, the market trend is likely to persist [28] - Focus on three main directions for industry selection: "AI + manufacturing overseas + related raw materials." Traditional industry allocations are shifting from high dividend yields to high free cash flow assets [28][39] Industry Insights - The AI investment trend is expected to continue, supported by industry, funding, and policy factors. Despite a shift from infrastructure competition to application value realization, demand for computational power will persist [21][22] - Global manufacturing is anticipated to maintain a recovery trend, aided by liquidity support from interest rate cuts and a restructuring of supply chains in response to security concerns [23][24] Investment Strategy - The focus is shifting from high dividend assets to high free cash flow assets, as the market environment changes. High free cash flow companies can provide both safety through dividends and growth through capital expenditures in key sectors like AI and manufacturing [48][49] - Growth-oriented stocks, particularly in the ChiNext board, are expected to outperform value stocks like the CSI 300, driven by strong earnings growth and favorable liquidity conditions [56][66] International Market Outlook - The Hong Kong stock market is projected to experience a slow bull run, with the Hang Seng Index potentially rising to 29,000 points, driven by earnings recovery and liquidity easing [71] - The US stock market is expected to see slower growth, with high valuations and strong earnings providing key support, but entering a phase of fragile balance with increased volatility [76]