Investment Rating - The report maintains a "Buy" rating for the company with a target price raised to 16 HKD [4][8]. Core Insights - The company is expected to experience significant growth in revenue and net profit in 2026 and 2027 due to the launch of new production capacities [4]. - In 2025, the company's revenue is projected to reach 25.35 billion RMB, a 10% year-on-year increase, with adjusted net profit expected to be 930 million RMB, reflecting a 1% growth [2][4]. - The gross profit margin is anticipated to be 15% in 2025, down 2 percentage points from the previous year, primarily due to price declines in some products and maintenance shutdowns [2][3]. Financial Summary - Revenue for 2025 is projected at 25.35 billion RMB, with a growth rate of 9.6% [6]. - The net profit for 2025 is expected to be 932 million RMB, with a significant increase in subsequent years, reaching 1.44 billion RMB in 2026 and 1.86 billion RMB in 2027, representing growth rates of 54.3% and 29.1% respectively [6][12]. - The company plans to distribute a final dividend of 0.32 RMB per share for 2025, a 23% increase year-on-year, with a payout ratio of 44% [2][4]. Product Performance - In 2025, urea revenue is expected to be 6.83 billion RMB, with an average selling price of 1,745 RMB/ton, a 10% decrease year-on-year [3]. - The revenue from compound fertilizers is projected to be 6.91 billion RMB, with an average selling price of 2,539 RMB/ton, down 3% year-on-year [3]. - The company is benefiting from low anti-dumping tax rates, which have positively impacted the gross margin of melamine, increasing it to 38% [3]. Production Capacity Expansion - The company is set to launch key projects in Henan, Xinjiang, and Guangxi, with total urea production capacity expected to exceed 8 million tons and overall fertilizer capacity to surpass 14 million tons [4]. - The new production facilities are anticipated to significantly reduce production costs and enhance operational cash flow, leading to a major financial turning point in 2027 [4].

Report Industry Investment Rating No relevant information provided. Core Viewpoints - In Q1 2026, urea prices continued the overall oscillatory upward trend. Supply increased with a rise in the urea operating rate to about 90% and a 8.2% year - on - year increase in production. Demand from agriculture maintained rigid growth, and industrial demand for urea in urea - formaldehyde resin and melamine increased due to export expectations driven by the Middle East situation. Export quotas had not been newly approved under the spring plowing supply guarantee [3]. - In 2026, the net new capacity of urea is expected to be nearly 3.62 million tons, with a capacity increase of over 3.8%. The operating rate may remain high, and the production increase may reach 4.9%. If the spot price continues to decline, the operating rate may be negatively affected, and the annual production increase may be reduced to 2.5 - 3.0%. Agricultural demand is expected to increase steadily by 3.5%, and compound fertilizer demand may increase by 6.9% due to export expectations [3]. - Domestic industrial demand may remain weak, but the export demand for melamine and urea - formaldehyde resin is expected to increase by 1.3 - 1.8% due to the expected rise in international furniture market prices. Urea export policies may be relaxed, and the export quota policy may continue, which is a major factor for the phased strength of urea prices. Urea is currently the valuation low in the industrial chain, and the increase in export demand for other products may drive the demand for urea indirectly [6]. Summary by Relevant Catalogs 2026 Q1 Market Review - In 2026, urea prices oscillated and rose, with the monthly spread decreasing and the basis rising slightly. Factors affecting the market included the continuous release of domestic production capacity, good demand during the agricultural peak season, the continuation of the urea export quota system, and the increase in the operating rate of melamine and the export demand for plates and furniture [11][13]. Capacity and Production - China's urea is in the stage of new production capacity release since 2020, with new devices using new coal gasification processes and having lower production costs. In Q1 2026, the newly put - into - operation capacity was 2.94 million tons, and the net new capacity was 1 million tons. It is expected that 6.99 million tons of new capacity will be put into operation in 2026, with a net new capacity of 2.97 million tons per year [18]. - According to the new production capacity plan, the new urea capacity may reach 14 million tons in the next 3 years, and the retired capacity is about 3 - 5 million tons, so the net new capacity may reach 9 - 11 million tons. In Q1, the capacity of the replaced fixed - bed process devices reached 1.94 million tons, and the proportion of the fixed - bed process decreased to about 15% [28]. - The cost of gas - based urea is under great pressure. The spot price of urea in 2026 is still significantly higher than the cash - flow cost of fixed - bed devices, while the gas - based urea devices are near the cost line. The international natural gas price has soared, and China's natural gas import dependence is 40%. In the long run, the planned natural gas supply also faces price - adjustment pressure, and export quotas may continue to be tilted towards gas - based enterprises [32]. - The operating rate of urea enterprises has remained high. Under the overall good profit of urea, the operating rate has long remained at an absolute high level of nearly 90%. After the increase in imported gas prices, the operating rate of domestic gas - based devices may face price - adjustment pressure [35]. - Urea production is expected to continue to grow in 2026. Although the speed of capacity release is slightly delayed, production capacity is still being steadily released. The production cost will be further reduced, and it is difficult for the overall capacity release to decrease due to less profit. However, since the operating rate has basically reached the limit of maintenance, the production increase in 2026 may be less than the capacity increase. It is estimated that the urea production in 2026 will increase by about 4.9% year - on - year [38][41]. Industry Chain and Price - The production of nitrogen - containing fertilizers has increased rapidly in recent years. In 2025, the production of synthetic ammonia is expected to increase by 34.5% compared with 2022. Although ammonium sulfate and ammonium chloride have a narrower application scope than urea, they still have certain substitutability when the price difference is large [48]. - After the geopolitical conflict, the prices of synthetic ammonia, ammonium sulfate, and ammonium chloride have risen significantly. The price increase of synthetic ammonia directly pushes up the production cost of urea, and the high export volume of synthetic ammonia is at a historical high. The increase in the export volume of ammonium sulfate and ammonium chloride may drive the potential demand for urea [57][66][70]. - The export increment of nitrogen fertilizers is greater than the production increment. Although the overall production of nitrogen fertilizers has increased by nearly 10%, the export volume has increased by 30 - 50%. In the context of tense geopolitical situations and rising energy prices, the export volume may increase even more, and the overall supply - demand situation of nitrogen fertilizers may become more tense [76]. Demand - **Agricultural Demand**: From 2020 - 2024, the grain sown area and output have increased. The government has introduced policies to increase the effective planting area, and the demand for urea in agriculture is expected to increase steadily by 3.5% in 2026. The demand for compound fertilizers is expected to increase by 6.9% due to the high international fertilizer prices and the growth of domestic agricultural demand [80][97][100]. - **Industrial Demand**: After the Spring Festival, the price of melamine rebounded rapidly, and the production increased by about 30%. The domestic demand for melamine and urea - formaldehyde resin is still weak, but the export demand is strong. It is expected that the demand for melamine and urea - formaldehyde resin for urea will increase by 1.3% and 1.8% respectively in 2026 [105][119][123]. Export - India's urea production may decrease by 5 - 8 million tons in 2026 due to the geopolitical conflict, and it is likely to increase its import demand. The new urea capacity outside China and India in 2026 is expected to be 4 million tons [125][135]. - Since March, the international urea price has risen by nearly 50% due to the geopolitical situation, but the direct export volume of urea has not changed much in the short term due to strict export policies. It is expected that the export volume of urea in 2026 will increase slightly to 5 million tons on the basis of 2025 [138][141]. Balance Sheet - The supply of urea in 2026 is expected to increase, but the growth rate of production may be less than that of capacity. The demand is expected to be slightly greater than the supply, and the low - valued urea in the industrial chain has the expectation of valuation repair [146].

Report Industry Investment Rating - Not provided in the given content Core Viewpoints - Urea spot ex-factory prices have reached the March guidance price, remaining stable during the critical period of spring plowing supply guarantee and price stability. The off-season reserve starts to be fully released in March. Affected by geopolitical conflict news, the overall volatility of bulk commodities has intensified, leading to fluctuations in the urea futures market and a slowdown in spot transactions. Downstream demand is mainly for rigid needs. Supply has decreased slightly due to an increase in temporary malfunctions. In the demand side, the application of greening fertilizers in central regions is nearing completion, while spring plowing in South China and Southwest China is in progress. The operating rate of compound fertilizers continues to rise, with good sales of previously low-priced orders but some resistance to high prices in the market. The melamine market sentiment is positive, with good export prospects, rising prices, and an increasing operating rate, leading to rigid demand for purchases. Recently, industrial demand has increased, resulting in a reduction in factory inventories and a slight increase in port inventories. The situation in Iran has caused a significant increase in international urea prices, but there is no new news about domestic export quotas, so the high overseas urea prices cannot be effectively transmitted to the domestic market. Continued attention should be paid to export dynamics, the rhythm of off-season reserve release, and the sustainability of spot purchase sentiment [2] Summary by Directory 1. Urea Basis Structure - On March 30, 2026, the closing price of the urea main contract was 1,882 yuan/ton (+5). The ex-factory price of small granular urea in Henan was 1,860 yuan/ton (0), in Shandong was 1,900 yuan/ton (+0), and in Jiangsu was 1,900 yuan/ton (+10). The basis in Shandong was 18 yuan/ton (-5), in Henan was -22 yuan/ton (-5), and in Jiangsu was 18 yuan/ton (+5) [1] 2. Urea Production - As of March 30, 2026, the enterprise capacity utilization rate was 88.35% (0.08%). The total inventory of sample enterprises was 70.05 tons (-10.84), and the port sample inventory was 16.90 tons (+0.20) [1] 3. Urea Production Profit and Operating Rate - The urea production profit was 300 yuan/ton (+0) [1] 4. Urea FOB Price and Export Profit - The export profit was 3,112 yuan/ton (+285) [1] 5. Urea Downstream Operating Rate and Orders - As of March 30, 2026, the capacity utilization rate of compound fertilizers was 51.24% (+1.27%); the capacity utilization rate of melamine was 65.98% (+6.67%); the number of pre - received order days of urea enterprises was 8.24 days (-0.05) [1] 6. Urea Inventory and Warehouse Receipts - As of March 30, 2026, the total inventory of sample enterprises was 70.05 tons (-10.84), and the port sample inventory was 16.90 tons (+0.20) [1] Strategies - Unilateral: Range - bound oscillation - Inter - period: Wait - and - see - Inter - variety: None [3]

Report Overview - Report Title: Urea Weekly Report: Strong Supply and Demand, High-level Fluctuations [1] - Release Date: March 30, 2026 - Report Issuer: Guantong Futures Co., Ltd. Investment Rating - No investment rating provided in the report Core Viewpoints - The international urea market is generally in a tight situation, while the domestic supply is relatively abundant after the release of daily production and national reserve supplies. The downstream demand mainly relies on high-nitrogen compound fertilizers from compound fertilizer factories. The future agricultural demand is expected to be concentrated around May and June. Currently, the operating rate of compound fertilizer factories has gradually increased to a high level, and the finished product inventory in the factories has been transferred to the end-users. However, as the spring fertilizer season is coming to an end, the subsequent operating rate may stabilize. Recently, the prices of raw materials have increased to varying degrees. After the increase in compound fertilizer prices, the follow-up of new orders has slowed down, and most of them are based on the execution of previous orders. The inventory in urea factories has significantly decreased, and the de-stocking pattern is expected to continue in the short term. Overall, the international urea price has risen sharply, while the domestic market has only been affected by sentiment and has not seen a synchronous sharp increase. The sufficient backlog of orders supports the spot price, and the market will mainly fluctuate at a high level under the situation of strong supply and demand. If the situation in the Middle East eases, the market sentiment may decline, but currently, it will mainly fluctuate narrowly at a high level during the peak season [2] Summary by Directory Spot Market Dynamics - The urea spot market remained stable over the weekend, with acceptable trading activity. Factories still had pending orders and no pressure to reduce prices to attract orders. The ex-factory prices of urea factories in Hebei, Shandong, and Henan remained stable at 1,810 - 1,840 yuan/ton [5] Futures Dynamics - Last week, the urea futures price was affected by Trump's threatening remarks on Monday and followed the energy and chemical sector up. It opened lower and closed lower on Tuesday, opened lower and closed higher but still ended down on Wednesday, opened higher and closed higher on Thursday and Friday. As of March 30, the main May contract of urea closed at 1,882 yuan/ton, down 2 yuan/ton from the settlement price of 1,884 yuan/ton on March 23. The weekly trading volume last week was 20.00668 million tons, a week-on-week decrease of 3.49162 million tons; the open interest was 8.4714 million tons, a week-on-week decrease of 257,200 tons. Since the conflict in the Middle East, urea has continued to fluctuate at a high level and fluctuated within a range with the change of sentiment. Last week, the decline of urea futures was greater than that of the spot price, and the basis weakened. As of March 30, the basis of the 05 contract was -22 yuan/ton, a weekly decrease of 7 yuan/ton. As of March 30, the 5 - 9 spread was -46 yuan/ton, a weekly decrease of 89 yuan/ton. On March 30, 2026, the number of urea warehouse receipts was 8,707, a week-on-week decrease of 5 [8][9][11] Urea Supply Side - Last week, the weekly output of urea decreased. From March 19 to March 25, the weekly output of urea was 1.4756 million tons, a decrease of 43,800 tons from the previous period, a week-on-week decrease of 2.88%, and the average daily output was 210,800 tons. Among them, the weekly output of coal-based urea was 1.2282 million tons, a week-on-week decrease of 2.41%; the weekly output of gas-based urea was 247,400 tons, a week-on-week decrease of 5.14%; the weekly output of small-granule urea was 116,970 tons, a week-on-week decrease of 3.15%; the weekly output of large-granule urea was 305,900 tons, a week-on-week decrease of 1.83%. In the next cycle, 3 enterprises are expected to resume production, and 3 enterprises are expected to stop production. According to Feiyitong data, on March 30, 2026, the national daily output of urea was 219,900 tons, an increase of 19,000 tons from the previous day, and the operating rate was 87.67%. The international coal price increase and the general rise of the energy and chemical sector caused by the tight balance of overseas energy have driven up the coal price. However, as it is currently the off-peak season for electricity demand, the domestic inventory has increased, and there is no strong driving force for the price to rise in the off-peak season, but it is expected to perform well in the summer peak season. As of March 30, the quoted price of Qinhuangdao thermal coal Q5500 was 761 yuan/ton, a weekly increase of 18 yuan/ton; the market price of anthracite washed small pieces in Jincheng was 950 yuan/ton, a weekly increase of 30 yuan/ton. Last week, the domestic liquefied natural gas price increased. As of March 30, the domestic benchmark price of liquefied natural gas was 4,494 yuan/ton, a weekly increase of 304 yuan/ton compared with 4,190 yuan/ton on March 23. Last week, the price of synthetic ammonia increased. As of March 27, the price of synthetic ammonia in Shandong was 2,425 yuan/ton, a weekly increase of 50 yuan/ton; the spot price of urea increased; the spread between synthetic ammonia and urea in Shandong was 525 yuan/ton, a weekly increase of 20 yuan/ton. Last week, the spot price of methanol increased. As of March 27, the quoted price of methanol was 2,850 yuan/ton, and the spread between methanol and urea was 950 yuan/ton, a weekly increase of 105 yuan/ton [15][17][19] Urea Demand Side - As of March 27, the quoted price of 45% sulfur-based compound fertilizer was 3,380 yuan/ton, a week-on-week increase of 30 yuan/ton. Currently, the operating rate of compound fertilizer factories has gradually increased to a high level, and the finished product inventory in the factories has been transferred to the end-users. However, as the spring fertilizer season is coming to an end, the subsequent operating rate may stabilize. Recently, the prices of raw materials have increased to varying degrees. After the increase in compound fertilizer prices, the follow-up of new orders has slowed down, and most of them are based on the execution of previous orders. As of March 27, the operating rate of compound fertilizer factories was 51.24%, a week-on-week increase of 1.27% and a year-on-year decrease of 3.06%. From March 21 to March 27, the weekly average capacity utilization rate of melamine in China was 51.24%, an increase of 6.67 percentage points from the previous period and 10.05 percentage points higher than the same period last year. The increase in urea price and international energy price has been transmitted to melamine, and under the sentiment of buying on rising and not buying on falling of downstream customers, the peak season is obvious, and the operating rate of factories has significantly increased this week. In terms of inventory data, as of March 26, 2026, the total inventory of urea enterprises in China was 700,500 tons, a decrease of 108,400 tons from the previous week, a week-on-week decrease of 13.4%, and 167,300 tons lower than the same period last year. During the peak season of spring plowing, the downstream sales were smooth, and the downstream factories actively purchased and stocked up. The resonance of the peak season of spring plowing and the increase in international urea prices stimulated more active trading activity, and the inventory in urea factories significantly decreased. It is expected that the de-stocking pattern will not change in the short term, and the de-stocking will continue next week. The sample inventory at ports was 169,000 tons, an increase of 20,000 tons from the previous week [22][23] International Market - Australia has a large rigid demand gap, and global supplies are concentrated in Australia. In addition, the supply and shipment in the Middle East are affected by the geopolitical conflict, and the prices of energy such as natural gas and oil have skyrocketed, accelerating the price increase of global nitrogen fertilizers. Next, attention should be paid to India's new round of tendering. As of March 27, the FOB price of small-granule urea in China was reported at $752.5/ton, a week-on-week increase of $40/ton; the FOB price in the Baltic Sea was $622.5/ton, a week-on-week increase of $27.5/ton; the price in the Arabian Gulf was $742.5/ton, a week-on-week increase of $27.5/ton; the CFR price in Southeast Asia was $772.5/ton, a week-on-week increase of $27.5/ton. As of March 27, the FOB price of large-granule urea in China was reported at $795/ton, a week-on-week increase of $72.5/ton; the FOB price of large-granule urea in Egypt was $767.5/ton, a week-on-week increase of $42.5/ton; the FOB price of large-granule urea in the Arabian Gulf was $727/ton, a week-on-week increase of $47.5/ton; the FOB price of large-granule urea in the Baltic Sea was $686.5/ton, a week-on-week increase of $21.5/ton; the CFR price in Southeast Asia was $775/ton, a week-on-week increase of $25/ton; the FOB price in the US Gulf was $685/ton, a week-on-week increase of $26/ton [25][27]

1. Report Industry Investment Rating - No relevant information provided 2. Core View of the Report - The weekly operating load of urea decreased slightly, and the off - season reserves were gradually put into the market, resulting in a sufficient supply. It is the traditional peak demand season for urea, and both industrial and agricultural demands still exist. With fertilizer procurement for agricultural preparation and use in various regions, and the high - level operation of compound fertilizer production, the demand for urea is supported. Therefore, the price is expected to remain stable [2] 3. Summary According to the Directory Market Changes - Urea's futures price first declined and then rose, while the spot price remained largely stable with minor fluctuations. On March 27, the closing price of the urea 2605 contract was 1877 yuan/ton, up 36 yuan/ton from the previous week, a 1.96% increase. The highest price during the period was 1903 yuan/ton, and the lowest was 1833 yuan/ton. The daily average price of urea in the Henan spot market was 1853 yuan/ton, up 3 yuan/ton from the previous week, a 0.16% increase [2][3] - The main - contract basis of urea weakened. On March 27, the main - contract basis in the Henan market was - 36 yuan/ton, with a weekly basis operating range of (- 46) - (- 25) yuan/ton. The 5 - 9 spread of urea also weakened. On March 27, the 5 - 9 spread was - 51 yuan/ton, with a weekly operating range of (- 64) - (- 51) yuan/ton [2][6] Fundamental Changes Supply - The urea operating load rate was 91.43%, a decrease of 0.78 percentage points from the previous week. Among them, the operating load rate of gas - based enterprises was 79.08%, an increase of 1.16 percentage points from the previous week. The daily average urea output was 21.08 tons [2][8] - Some devices in Heilongjiang, Shandong, and Henan were under maintenance or reduced production, while those in Hubei, Sichuan, and Ningxia were restored or increased production. Next week, some devices in Shandong and Heilongjiang will gradually resume or increase production, and there are no plans for device reduction or maintenance [8] Cost - The anthracite market price was adjusted strongly. As of March 26, the tax - included price of washed small anthracite blocks with S0.4 - 0.5 in Jincheng, Shanxi was 910 - 950 yuan/ton, with the closing price up 25 yuan/ton from the previous week. The tax - included price of washed anthracite blocks with S1 - 1.5 in Yangquan, Shanxi was 810 - 870 yuan/ton, with the closing price up 30 yuan/ton from the previous week [2][11] Profit - The gross profit margin of coal - based urea was 4.93%, and that of gas - based urea was - 3.44% [11] Demand - The average advance sales of major urea producers was 6.2 days, and the weekly production - sales rate of urea enterprises was 100.7%. As the temperature warms up, the demand for wheat green - turning fertilizer is gradually released. In terms of industrial demand, the production - capacity operation rate of compound fertilizers and the operating load rate of melamine have increased, and the overall production and sales are relatively stable [13][14] - Most winter wheat in North China, northern Huanghuai, the eastern part of Northwest China, and most of Xinjiang is in the green - turning to standing stage; in southern Huanghuai, Jianghuai, Jianghan, and Guanzhong, Shaanxi, it is in the jointing to booting stage; in most of Southwest China, it is in the booting to heading and flowering stage; and in parts of southern Sichuan and eastern Yunnan, it has entered the milk - ripening stage. The growth period of most winter wheat is close to the normal level, or 3 - 6 days earlier, and more than 7 days earlier in some areas [16] - The production - capacity operation rate of compound fertilizer enterprises was 51.24%, an increase of 1.27 percentage points from the previous week. The compound fertilizer inventory was 69.01 tons, a decrease of 4.37 percentage points from the previous week. The high - level operation of compound fertilizer production supports the current urea price. The market continues to sell, mainly fulfilling advance sales. Dealers actively pick up goods, and the supply gradually reaches the grass - roots outlets. It is expected that the production - capacity operation rate of compound fertilizers may remain stable next week [16] - The operating load rate of melamine enterprises was 70.23%, an increase of 7.32 percentage points from the previous week. The weekly output was 3,943 tons, and the melamine price continued to rise significantly. Some new short - stop maintenance occurred in Sichuan Chengdu Yulong and Henan Junhua, while Xinjiang Jinxiang Sairui Phase II, Shaanxi Longhua, and Hebei Xinji Jiuyuan Phase III gradually resumed production. It is expected that the operating load rate of the melamine industry will fluctuate narrowly between 60% and 70% next week [19] - The national building materials and home furnishing prosperity index and the sales volume of large - scale building materials and home furnishing stores decreased, and the demand support in the panel market weakened [20] Inventory - The urea inventory of enterprises was 57.5 tons, a decrease of 7.6 tons from the previous week and a decrease of 23 tons compared with the same period last year. The urea port inventory was 23.9 tons, the same as the previous week. The number of registered urea warehouse receipts was 8,707, totaling 174,140 tons, an increase of 3,046 receipts or 60,920 tons compared with the same period last year [2][23] Key Points to Watch - The operating situation of compound fertilizers, the reduction and maintenance of urea devices, export policies, and coal - price fluctuations [2]

Group 1: Macro Economic Insights - Industrial enterprises in China achieved a total profit of 10,245.6 billion yuan in January-February 2026, representing a year-on-year growth of 15.2%, significantly accelerating by 14.6 percentage points compared to December 2025 [5][6][8] - The mining industry's profit total increased by 9.9% year-on-year in January-February 2026, contributing 1.5 percentage points to the overall profit growth of industrial enterprises [7] Group 2: Real Estate Sector - Jianfa International Group reported a revenue of 136.79 billion yuan for 2025, a decrease of 4.3% year-on-year, with a net profit of 3.65 billion yuan, down 24.0% year-on-year [12] - The company proposed a cash dividend of 0.9 HKD per share, with a payout ratio of 49% [12] - The company's gross profit margin improved for two consecutive years, reaching 13.9% in 2025, an increase of 0.6 percentage points [12][13] Group 3: Basic Chemical Industry - Satellite Chemical achieved a revenue of 46.068 billion yuan in 2025, a year-on-year increase of 0.92%, while the net profit attributable to shareholders decreased by 12.54% to 5.311 billion yuan [18] - The company maintained a buy rating due to its advantages in light hydrocarbon integration technology [18][19] - The global petrochemical industry is transitioning towards a focus on integration and optimization, enhancing the importance of light hydrocarbon routes [20] Group 4: Investment Recommendations - Jianfa International Group is expected to achieve revenues of 138.1 billion yuan, 141.9 billion yuan, and 146.4 billion yuan from 2026 to 2028, with corresponding net profits of 4.1 billion yuan, 4.7 billion yuan, and 5.4 billion yuan [16] - Satellite Chemical's projected net profits for 2026, 2027, and 2028 are 7.952 billion yuan, 9.355 billion yuan, and 9.740 billion yuan, respectively, with a strong buy rating maintained [22]

Investment Rating - The report rates the chemical industry as "Outperform" [1] Core Views - The report highlights that international oil prices continue to rise, impacting the supply and transportation of petrochemical products due to ongoing geopolitical conflicts. It emphasizes the need to focus on large energy state-owned enterprises, leading companies in coal chemical with stable and relatively low-cost raw material supply, and fine chemical leaders with favorable supply-demand dynamics [1][10] Summary by Sections Industry Dynamics - In the week of March 23-29, 2026, among 100 tracked chemical products, 59 saw price increases, 13 experienced declines, and 28 remained stable. 83% of products had month-on-month average prices rising, while 11% fell, and 6% remained unchanged. The top gainers included methionine, formaldehyde (East China), and epoxy propane (East China) [10][34] Investment Recommendations - As of March 29, 2026, the TTM price-to-earnings ratio for the SW basic chemical sector is 29.30, at the 84.18% historical percentile, while the price-to-book ratio is 2.58, at the 73.33% historical percentile. The SW oil and petrochemical sector has a TTM price-to-earnings ratio of 16.79, at the 50.72% historical percentile, and a price-to-book ratio of 1.59, at the 54.82% historical percentile. The report suggests focusing on traditional chemical leaders with resilience and potential for performance and valuation improvement, as well as sectors benefiting from "anti-involution" measures [10][13] Key Price Movements - The report notes significant price increases for melamine and epoxy propane. Melamine prices rose to 8,247 CNY/ton, up 25.75% week-on-week and 49.24% year-on-year. Epoxy propane prices reached 12,800 CNY/ton, increasing by 21.33% week-on-week and 67.54% year-on-year. The price increases are attributed to geopolitical impacts and rising raw material costs [36][37]

Investment Rating - The report maintains a "Strong Buy" rating for Xuefeng Technology (603227) with an expected performance exceeding the benchmark index by over 20% in the next six months [3][15]. Core Insights - In 2025, Xuefeng Technology faced revenue pressure with a total revenue of 5.564 billion yuan, down 8.81% year-on-year, and a net profit attributable to shareholders of 504 million yuan, down 24.65% year-on-year. However, Q4 showed a positive trend with a net profit of 110 million yuan, up 65.31% year-on-year [1][7]. - The company has a strategic advantage in Xinjiang, enhancing its core asset value and long-term growth potential. The acquisition of additional explosive production capacity is expected to strengthen its competitive position [6][7]. - The chemical segment remains under pressure due to declining prices of major chemical products, although the LNG business showed growth with a revenue increase of 18.7% [6][7]. - The change in controlling shareholder to Guangdong Hongda is seen as a positive signal, with plans for significant asset injections to support future growth [6][7]. Financial Summary - In 2025, the total revenue was 5,564 million yuan, with a projected increase to 6,873 million yuan in 2026, representing a year-on-year growth of 23.5% [7]. - The net profit attributable to shareholders is expected to recover to 769 million yuan in 2026, reflecting a growth rate of 52.7% compared to 2025 [7]. - The company’s earnings per share (EPS) is projected to rise from 0.47 yuan in 2025 to 0.72 yuan in 2026 [7].

1. Report Industry Investment Rating - Unilateral: Oscillation [3] - Inter - period: Wait - and - see [3] - Inter - variety: None [3] 2. Core Viewpoints - Urea spot ex - factory quotes have reached the March guidance price, and the domestic market is in a critical period of ensuring supply and stabilizing prices during the spring plowing season. The ex - factory price of urea spot remains stable. The off - season storage starts to be fully released in March. Affected by geopolitical conflict news, the bulk market as a whole has corrected, the urea futures market has fluctuated, and spot transactions have slowed down. The supply has decreased slightly due to an increase in temporary failures. The demand for green - turning fertilizer in the central region is coming to an end, while the spring plowing in the South China and Southwest regions is in progress. The compound fertilizer production has continued to pick up, with good shipments of low - price orders in the early stage, but the high - price market has some resistance. The melamine market sentiment is good, exports are promising, prices are rising, production has increased, and there is rigid demand for procurement. Recently, industrial demand has increased, factory inventories have decreased, and port inventories have slightly increased. The situation in Iran has led to a significant increase in international urea prices, but there is no new news about the current domestic export quota, so the high overseas urea prices cannot be effectively transmitted to the domestic market. Continued attention should be paid to export dynamics, the rhythm of off - season storage release, and the sustainability of spot procurement sentiment [2] 3. Summary by Directory 3.1 Urea Basis Structure - On March 26, 2026, the closing price of the urea main contract was 1,875 yuan/ton (+12). The ex - factory price of small - granular urea in Henan was 1,860 yuan/ton (unchanged), in Shandong was 1,890 yuan/ton (unchanged), and in Jiangsu was 1,890 yuan/ton (unchanged). The price of small - block anthracite was 850 yuan/ton (unchanged). The basis in Shandong was 15 yuan/ton (-12), in Henan was - 15 yuan/ton (-12), and in Jiangsu was 15 yuan/ton (-12) [1] 3.2 Urea Production - As of March 26, 2026, the enterprise capacity utilization rate was 88.35% (an increase of 0.08%). The total inventory of sample enterprises was 70.05 tons (-10.84), and the port sample inventory was 16.90 tons (+0.20) [1] 3.3 Urea Production Profit and Operating Rate - The urea production profit was 290 yuan/ton (unchanged), and the export profit was 2,829 yuan/ton (-4) [1] 3.4 Urea Foreign Market Price and Export Profit - The situation in Iran has led to a significant increase in international urea prices, but there is no new news about the current domestic export quota, so the high overseas urea prices cannot be effectively transmitted to the domestic market [2] 3.5 Urea Downstream Production and Orders - As of March 26, 2026, the capacity utilization rate of compound fertilizer was 51.24% (an increase of 1.27%); the capacity utilization rate of melamine was 65.98% (an increase of 6.67%); the number of days of advance orders for urea enterprises was 8.24 days (-0.05) [1] 3.6 Urea Inventory and Warehouse Receipts - As of March 26, 2026, the total inventory of sample enterprises was 70.05 tons (-10.84), and the port sample inventory was 16.90 tons (+0.20) [1]

1. Report Industry Investment Rating - Unilateral: Oscillation; Inter - period: Observation; Inter - variety: None [3] 2. Core Viewpoints - The agricultural demand for urea is weakening while the industrial demand is strengthening. The ex - factory price of urea spot has reached the March guidance price, and the price is mainly stable during the key period of spring plowing supply guarantee and price stability. The off - season storage starts to be fully released in March. Affected by geopolitical conflict news, the bulk market has corrected, the urea futures market has fluctuated, and spot trading has slowed down. Supply has decreased slightly due to more temporary failures. In the demand side, the application of green - turning fertilizer in the central region is nearly over, and spring plowing is in progress in the South China and Southwest regions. The operation rate of compound fertilizer has continued to rise, with good shipment of low - price orders and some resistance to high - price markets. The melamine market is in good sentiment, with rising prices, increasing operation rate, and rigid demand for procurement. Recently, industrial demand has increased, factory inventory has decreased, and port inventory has slightly decreased. The situation in Iran has caused a sharp rise in international urea prices, but there is no new news about domestic export quotas, so the high overseas urea prices cannot be effectively transmitted to the domestic market. Follow - up attention should be paid to export dynamics, off - season storage release rhythm, and the sustainability of spot procurement sentiment [1][2] 3. Summary According to the Catalog 3.1 Urea Basis Structure - The report presents figures related to Shandong and Henan urea small - particle prices, Henan basis, urea main contract closing price, 1 - 5 spread, 5 - 9 spread, and 9 - 1 spread [6][7][9] 3.2 Urea Production - Figures about urea weekly output and urea plant maintenance loss volume are provided [24] 3.3 Urea Production Profit and Operation Rate - The report shows figures on urea production cost, urea production profit, coal - based capacity utilization rate, and natural gas - based capacity utilization rate [22][29] 3.4 Urea Outer - Market Price and Export Profit - Figures related to urea small - particle FOB in the Baltic Sea, urea large - particle CFR in Southeast Asia, urea small - particle and large - particle FOB in China, the difference between urea small - particle FOB in the Baltic Sea and China FOB minus 30, the difference between urea large - particle CFR in Southeast Asia and China FOB, export profit, and on - disk export profit are presented [36][41][43] 3.5 Urea Downstream Operation and Orders - Figures about compound fertilizer capacity utilization rate, melamine capacity utilization rate, and pending order days are shown [49][54] 3.6 Urea Inventory and Warehouse Receipts - Figures related to factory inventory, port inventory, raw material inventory of urea downstream manufacturers in Hebei, urea warehouse receipt quantity, urea main contract holding volume, and urea main contract trading volume are provided [50][59][58]