Core Viewpoint - The company, Ando Amway A (000553.SZ), has confirmed that its innovative compound GilboaTM (flumetylsulforim) is classified as an innovative agricultural drug, featuring a new mechanism of action for grain fungicides [2] Group 1 - The innovative compound GilboaTM has been certified by the Fungicide Resistance Action Committee, indicating its novel mechanism for controlling grain diseases [2]

Group 1 - The chemical sector experienced a volatile upward trend on August 18, with the Chemical ETF (516020) opening high and fluctuating in positive territory, rising over 1% at one point and closing up 0.59% [1] - Key stocks in the sector included lithium battery and fluorochemical companies, with notable gains from Xinzhou Bang and Kaisa Bio, both up over 6%, and other companies like Juhua Co. and Lianhong Xinke rising over 4% [1][2] - The chemical ETF's underlying index had a price-to-book ratio of 2.11, indicating a low valuation at the 29.22 percentile over the past decade, suggesting attractive long-term investment opportunities [3] Group 2 - Analysts predict that the chemical industry will see a stabilization in domestic demand due to the implementation of various expansion policies, although competition on the supply side may lead to weaker product prices and lower capacity utilization [1][3] - The chemical market is expected to undergo a phase of recovery, particularly in sub-sectors like pesticides, organic silicon, and polyester filament, as the industry addresses issues of overcapacity and excessive competition [3] - The Chemical ETF (516020) provides a diversified investment approach, covering various sub-sectors and concentrating nearly 50% of its holdings in large-cap leading stocks, which allows investors to capitalize on strong market trends [4]

Group 1 - The chemical sector experienced a volatile upward trend on August 18, with the chemical ETF (516020) opening high and fluctuating in the red, showing a rise of 0.59% at the time of reporting [1] - Key stocks in the lithium battery and fluorochemical sectors saw significant gains, with companies like Xinzhou Bang and Kaisa Bio rising over 6%, while others like Juhua Co. and Lianhong Xinke increased by over 4% [1] - The chemical ETF (516020) tracks the sub-index of the chemical industry, which has a price-to-book ratio of 2.11, indicating a low valuation compared to the historical average [3] Group 2 - Analysts from Zhongyuan Securities suggest that the ongoing rectification in the chemical industry will alleviate issues of redundant capacity and excessive competition, leading to a phase of improved market conditions [4] - Huazhong Securities notes a clear differentiation in chemical product prices, with expectations for gradual recovery as global chemical industries adjust to energy structure transformations and macroeconomic policies [4] - The chemical ETF (516020) provides an efficient way to invest in the chemical sector, with nearly 50% of its holdings concentrated in large-cap leading stocks, allowing investors to capitalize on strong market leaders [5]

Core Points - The 18th China Pesticide Industry Association Science and Technology Awards were held on August 14 in Qingdao during the 6th National Pesticide Industry Innovation Exchange Conference [1] - A total of 5 technological invention awards were granted, including 2 first prizes, 1 second prize, and 2 third prizes for the creation and application of the new herbicide Pyrazolylbutyl ester [1] - Additionally, 14 technological progress awards were given, with 9 second prizes and 5 third prizes for the development and industrialization of the green and efficient preparation process of Benzylacetone [1]

Core Viewpoint - The implementation of the "One Product, One Certificate" policy starting January 1, 2026, is expected to significantly impact the pesticide industry, leading to the exit of 80% of borrowing certificate-produced pesticides from the market, which will force many large distributors to shift towards purchasing pesticide formulations from leading companies [1] Group 1 - The Ministry of Agriculture and Rural Affairs issued Announcement No. 925 on June 29, 2025, to regulate pesticide labeling and instruction management, which will take effect on January 1, 2026 [1] - The announcement aims to further standardize pesticide labeling, promoting fair competition within the pesticide market [1] - As a leading global plant protection enterprise, the company possesses a substantial reserve of registration certificates and is committed to responding positively to government requirements for the sustainable development of the pesticide industry [1]

Investment Rating - The report maintains an "Accumulate" rating for the company [6]. Core Views - The pesticide industry is experiencing a recovery in market demand, leading to a significant improvement in the company's net profit attributable to shareholders in the first half of 2025 [1][2]. - The company achieved a revenue of 2.083 billion yuan in 25H1, a year-on-year increase of 7.3%, and a net profit of 42 million yuan, up 117.8% year-on-year [1]. - The company is focusing on optimizing its product structure and accelerating overseas market registration to capture orders, resulting in export sales of 1.087 billion yuan, a year-on-year increase of 19.61% [2]. Summary by Sections Financial Performance - In 25H1, the company reported revenues from herbicides, insecticides, fungicides, and regulators of 1.06 billion, 790 million, 170 million, and 80 million yuan respectively, with year-on-year changes of +14.8%, +0.5%, -3.3%, and +40.1% [2]. - The gross margins for these products were 11.1%, 15.7%, 13.9%, and 26.9%, with year-on-year changes of -4.1, +8.6, -0.1, and +17.3 percentage points [2]. Capacity and Production - As of the end of 2024, the company has a raw material production capacity of 43,910 tons per year and a formulation capacity of 20,000 tons per year, with an additional 5,500 tons per year of raw material capacity under trial operation or construction [3]. - The company is advancing its production debugging and safety production for the relocation project along the Yangtze River, which is expected to support its performance in 2025 [2]. Profit Forecast and Valuation - The report adjusts the profit forecast for 2025-2026 downwards, with the expected net profits for 2025, 2026, and 2027 being 74 million, 128 million, and 181 million yuan respectively [4]. - The company is expected to benefit from the release of its construction capacity, which will support sustainable and healthy development [4].

Investment Rating - The report maintains a positive outlook on the chemical industry, particularly focusing on heat dissipation materials and helium gas from Russia, as well as incidents affecting Zhongkun Chemical [3][4]. Core Insights - The macroeconomic judgment indicates that non-OPEC countries are expected to lead an increase in oil production, with a significant overall supply growth anticipated. Global GDP growth is projected at 2.8%, with stable oil demand despite some slowdown due to tariffs [3][4]. - The trend towards liquid cooling in AI servers is highlighted, with significant power requirements leading to increased demand for specialized cooling materials. The report suggests monitoring companies like Bayi Shikong, New Era, Dongyangguang, Yonghe Co., and Juhua Co. [3][4]. - Recent incidents affecting helium supply in Russia and a fire at Zhongkun Biotech are expected to positively impact the helium supply-demand balance, with recommendations to focus on companies like Guanggang Gas, Huate Gas, and Jinhong Gas [3][4]. Summary by Sections Industry Dynamics - Oil supply is expected to increase significantly, with non-OPEC countries leading the way. Global oil demand remains stable, but growth may slow due to tariff impacts. Coal prices are expected to stabilize at low levels, while natural gas export facilities in the U.S. may reduce import costs [4][5]. Chemical Sector Configuration - The report notes a decrease in oil prices and an increase in coal prices, with industrial product PPI showing a year-on-year decline of 3.6%. Manufacturing PMI recorded at 49.3%, indicating a slight contraction in manufacturing activity [3][5]. Investment Analysis - Traditional cyclical investments should focus on leading companies in their respective sectors, including Wanhu Chemical, Hualu Hengsheng, and Baofeng Energy. Growth sectors include semiconductor materials and OLED panel materials, with specific companies highlighted for their potential [3][4][17].

Investment Rating - Industry Rating: Outperform the Market (upgraded from Neutral) [5] Core Insights - The US has imposed a 50% tariff on Indian imports, which may impact the pesticide industry significantly [12] - India is the world's third-largest producer and exporter of agricultural chemicals, with a production capacity of 389,000 tons and an output of 258,000 tons in 2022-23 [2][13] - The global pesticide formulation export value is projected to be approximately $39.5 billion in 2024, with India contributing $4.142 billion, making it the third-largest exporter [2][23] - The export structure of Indian pesticides shows that herbicides account for 39% of export value, while fungicides account for 43% of export volume [2][23] - From FY 2014-15 to FY 2023-24, India's pesticide export value has grown at a compound annual growth rate (CAGR) of 12.6%, while imports have grown at a slower pace of 7.7% [31] Summary by Sections Section 1: US Tariffs on Indian Imports - The US has announced a 25% tariff on Indian imports, which will be effective from August 7, 2023, leading to a total tariff rate of 50% [12] Section 2: India's Agricultural Chemical Industry - India ranks as the fourth-largest agricultural chemical producer globally, with a significant focus on exports [2][23] - The production structure is dominated by insecticides and fungicides, which account for 47% and 34% of total production capacity, respectively [13] Section 3: US Pesticide Imports - The US heavily relies on China and India for pesticide imports, with China exporting $9 billion and India $4.1 billion in 2024 [3][34] - The US's dependence on Indian imports includes 77% of certain insecticides and 90% of specific fungicides [4][44] Section 4: Recommended Stocks - Key recommendations include Yangnong Chemical and Runfeng Co., with expected net profits of 1.47 billion, 1.78 billion, and 2 billion yuan for Yangnong from 2025 to 2027 [56] - Runfeng Co. is projected to achieve net profits of 1.26 billion, 1.41 billion, and 1.59 billion yuan in the same period [57]

Core Viewpoint - The performance of pesticide companies in the first half of the year shows significant disparities, with some companies experiencing substantial profit growth while others face losses due to varying product prices and market conditions [2][4]. Group 1: Company Performance - Limin Co., Ltd. reported a net profit increase of 747.13% in the first half of the year, achieving a revenue of 2.69 billion yuan, driven by rising prices of its main products [3][4]. - Xinda Co., Ltd. expects a net profit increase of 2443.43% to 2834.73%, primarily due to the price surge of its main product, oxazolone [4]. - Ando Agricultural Co. anticipates a loss of 54 million to 108 million yuan, citing "price weakness" as a key factor [4]. - Hongtaiyang expects a loss of 168 million to 228 million yuan, attributing the downturn to intense market competition and low product prices [4][5]. Group 2: Market Trends - The pesticide industry is experiencing a recovery, but the price of formulation products remains weak overall [2][6]. - The price of the key product, mancozeb, increased from 23,500 yuan per ton in March to 25,000 yuan per ton by mid-year, reflecting a 6.4% rise [6]. - The price of abamectin rose from 350,000 yuan per ton at the beginning of the year to 510,000 yuan per ton by June [6]. - The overall pesticide price index (CAPI) was 79.48 in June, showing a slight increase of 0.47% month-on-month but a year-on-year decrease of 3.77% [8]. Group 3: Industry Insights - The growth of Limin Co. is not representative of the entire pesticide industry, as it benefits from specific advantages [9]. - The industry is undergoing a restructuring of supply dynamics, with expectations of a more equitable competitive environment in the next three years, which may lead to improved product prices and profitability [9].

Investment Rating - The report maintains an "Outperform" rating for the industry [6] Core Views - The chemical sector is experiencing a recovery in both prices and demand, benefiting leading companies with significant scale advantages and cost efficiencies [8] - The domestic tire industry shows strong competitiveness, with scarce growth targets worth attention [3] - The consumption electronics sector is expected to gradually recover, with upstream material companies likely to benefit [4] - The phosphorous chemical sector is tightening due to environmental policies and increasing demand from the new energy sector [5] - The vitamin market is facing supply disruptions, particularly for Vitamin A and E, due to BASF's force majeure [8] Summary by Sections Market Overview - The Shanghai Composite Index rose by 1.7%, the ChiNext Index increased by 8.58%, and the CSI 300 Index went up by 2.37% [14] - The CITIC Basic Chemical Index increased by 3.16%, while the Shenwan Chemical Index rose by 2.46% [15] Key Industry Dynamics - Covestro has cut its TDI supply to the Chinese market by 15%, exacerbating supply tightness [3] - Hengli Petrochemical's subsidiaries are merging to optimize management and improve operational efficiency [3] Investment Themes - **Tire Sector**: Domestic companies are becoming increasingly competitive, with recommended stocks including Sailun Tire, Senqcia, General Motors, and Linglong Tire [3] - **Consumer Electronics**: Recovery in demand is anticipated, with a focus on upstream material companies like Dongcai Technology and Stik [4] - **Phosphorous Chemicals**: Supply constraints due to environmental regulations and rising demand from new energy sectors suggest a tightening market [5] - **Fluorine Chemicals**: The reduction of production quotas for second-generation refrigerants supports stable profitability [5] - **Textile Sector**: Polyester filament inventory depletion is expected to benefit companies like Tongkun and New Fengming [5] Sub-industry Performance - The polyurethane sector is seeing stable prices for pure MDI and a slight decline for polymer MDI [27][32] - The tire industry shows a mixed performance with full steel tire production increasing while semi-steel tire production is declining [47][50] - The pesticide market is experiencing price fluctuations, with glyphosate prices rising slightly [52] Price Trends - The average price of urea is reported at 1762.6 RMB/ton, showing a decrease of 1.74% [60] - The price of phosphoric acid remains stable, with diammonium phosphate at 3999.38 RMB/ton [64] - The price of vitamins A and E remains unchanged at 64 RMB/kg and 67.5 RMB/kg respectively [76][77]