1. Report Industry Investment Rating No information provided. 2. Core View of the Report - The supply of new cotton is increasing significantly this year, but the expected increase may be lower than previously thought. The demand is entering a relatively off - season after the peak season, and the previous negative factors have been mostly reflected in the market. It is expected that Zhengzhou cotton futures will likely fluctuate with limited upside and downside potential. The upcoming Sino - US trade negotiations and the expiration of the Sino - US tariff agreement in November may have a significant impact on the market [6]. - The US cotton is expected to move in a sideways pattern, and Zhengzhou cotton is also predicted to show a volatile trend. For trading strategies, it is advisable to wait and see for arbitrage and options [7][8][9]. 3. Summary by Relevant Catalogs First Part: Market Information - **Futures Market**: The closing prices of CF01, CF05, and CF09 contracts decreased by 25, 30, and 35 respectively. The trading volume of CF01, CF05, and CF09 decreased by 109,232, 48,335, and 1,748 hands respectively. The open interest of CF01 decreased by 1,984, while that of CF05 increased by 3,646 and CF09 increased by 352. The CY01 contract remained unchanged, and CY05 and CY09 had no trading volume [2]. - **Spot Market**: The CCIndex3128B price was 14,819 yuan/ton, down 23 yuan/ton. The Cot A price was 75.40 cents/pound. The prices of some other products such as polyester staple fiber, viscose staple fiber, etc. had different changes [2]. - **Spread**: In cotton inter - period spreads, the 1 - 5 month spread was - 5 (up 5), the 5 - 9 month spread was - 175 (up 5), and the 9 - 1 month spread was 180 (down 10). In cotton - yarn inter - period spreads, the 1 - 5 month spread was 19,790 (unchanged), the 5 - 9 month spread was 0 (unchanged), and the 9 - 1 month spread was - 19,790 (unchanged). The CY01 - CF01 spread was 6,300 (up 25). The 1% tariff - based internal - external cotton spread was 1,627 (up 37) [2]. Second Part: Market News and Views - **Cotton Market News**: On November 13, 2025, the out - of - Xinjiang cotton road transport price index was 0.1827 yuan/ton·km, remaining unchanged. On November 12, the Xinjiang machine - picked cotton purchase index was 6.23 yuan/kg (unchanged), and the hand - picked cotton purchase index was 6.87 yuan/kg (down 0.05 yuan/kg). As of November 10, 2025, the cotton picking progress in Xinjiang was about 98.5%, with the northern region at 100%, the southern region at 97.5%, and the eastern region at 98.8% [4][5]. - **Trading Logic**: With new cotton hitting the market in large quantities in November, there may be selling and hedging pressure. Although this year's cotton production is high, the expected increase may be lower than previously thought. The demand is in a relatively off - season. Zhengzhou cotton is expected to fluctuate, and Sino - US trade policies need to be closely monitored [6]. - **Trading Strategies**: For single - side trading, both US cotton and Zhengzhou cotton are expected to move sideways. For arbitrage and options, it is recommended to wait and see [7][8][9]. - **Cotton - Yarn Industry News**: The Zhengzhou cotton futures showed a bearish trend last night, with high hedging pressure. The pure - cotton yarn market had average trading, mainly for rigid demand. The downstream orders were decreasing, and most manufacturers lacked confidence in the future. The current operation rate remained stable, and the inventory increased slightly. The all - cotton grey fabric market had a differentiated trading situation, with limited orders and difficulty in price increase [9]. Third Part: Options - **Option Data**: On November 13, 2025, for the CF601C13400.CZC option, the closing price was 168.00 (up 2.4%), the implied volatility (IV) was 7.7%. For the CF601P13000.CZC option, the closing price was 21.00 (down 16.0%), the IV was 10.5%. For the CF601P12400.CZC option, the closing price was 6.00 (down 33.3%), the IV was 15.4% [11]. - **Option Strategy**: It is recommended to wait and see [9][13]. Fourth Part: Relevant Attachments - The report provides multiple charts, including the internal - external cotton price spread under 1% tariff, cotton basis for January, May, and September, CY - CF spreads, and cotton inter - period spreads [15][18][22][24].

Core Viewpoint - The company reported a decrease in revenue and net profit for the first half of 2025, indicating ongoing challenges in the market while implementing cost control and efficiency measures to improve profitability [2][10]. Financial Performance - Revenue for the first half of 2025 was approximately CNY 13.96 billion, a decrease of 8.32% compared to CNY 15.22 billion in the same period last year [2]. - The net profit attributable to shareholders was a loss of approximately CNY 194.13 million, an improvement of 20% from a loss of CNY 242.67 million in the previous year [2]. - The net cash flow from operating activities decreased by 54.72% to approximately CNY 1.23 billion from CNY 2.73 billion [2]. - Basic earnings per share were reported at -0.0754, an improvement of 19.96% from -0.0942 [2]. Business Operations - The company focused on quality management, cost reduction, and efficiency improvements across various operations, including procurement, production, and sales [3][4]. - The company has developed a comprehensive supply chain quality management system to enhance product quality and customer service [4]. - The company aims to expand its product offerings and optimize its product structure to meet market demands [4]. Industry Overview - The chlor-alkali chemical industry is facing challenges due to an oversupply situation, particularly in the PVC market, which is closely tied to the real estate sector [6][8]. - The caustic soda market experienced price fluctuations driven by changes in aluminum oxide demand, with expectations of increased demand in the second half of the year [8]. - The viscose fiber market is under pressure from competition with alternative fibers and overall weak demand, leading to a forecast of continued low prices [8]. Key Products and Applications - The company produces four main products: PVC resin, ion-exchange membrane caustic soda, viscose fiber, and viscose yarn, leveraging local natural resources [5][6]. - PVC is widely used in various industries, including construction, agriculture, and packaging, with a trend towards higher performance and environmentally friendly products [6]. - Viscose fiber, made from natural cellulose, is used in textiles and has applications across various sectors due to its good moisture absorption and dyeing properties [7]. Competitive Advantages - The company has established a complete integrated circular economy industrial chain, enhancing its competitive edge in resource utilization and cost management [10]. - The focus on technological innovation and collaboration with research institutions has strengthened the company's capabilities in developing new products and improving production processes [10].

Financial Overview - The company reported a total revenue of CNY 13.96 billion for the first half of 2025, a decrease from CNY 15.22 billion in the same period of 2024, representing a decline of approximately 8.3% [3][4] - The total operating costs for the first half of 2025 were CNY 14.07 billion, down from CNY 15.56 billion in 2024, indicating a reduction of about 9.6% [3][4] - The net profit for the first half of 2025 was a loss of CNY 233.09 million, compared to a loss of CNY 327.25 million in the same period of 2024, showing an improvement in losses [4][5] Balance Sheet Highlights - Total assets at the end of the reporting period amounted to CNY 78.76 billion, an increase from CNY 77.02 billion at the beginning of the period [2][3] - Total liabilities increased to CNY 51.08 billion from CNY 48.98 billion, reflecting a rise of approximately 4.5% [2][3] - Shareholders' equity decreased to CNY 27.68 billion from CNY 28.05 billion, indicating a decline of about 1.4% [2][3] Cash Flow Analysis - The net cash flow from operating activities for the first half of 2025 was CNY 1.23 billion, down from CNY 2.73 billion in the same period of 2024, indicating a decrease of approximately 54.8% [6][7] - Cash flow from investing activities showed a net outflow of CNY 1.54 billion, compared to a net outflow of CNY 1.56 billion in 2024 [6][7] - Cash flow from financing activities resulted in a net inflow of CNY 1.63 billion, contrasting with a net outflow of CNY 829.8 million in the previous year [6][7] Key Financial Ratios - The basic earnings per share for the first half of 2025 was reported at -0.0754, an improvement from -0.0942 in the same period of 2024 [4][5] - The company's total liabilities to equity ratio increased, reflecting a higher leverage position compared to the previous year [2][3] Operational Insights - The company experienced a decrease in cash received from sales, totaling CNY 17.56 billion, down from CNY 19.42 billion in 2024 [6][7] - The company’s financial expenses, including interest expenses, were reported at CNY 539 million, slightly up from CNY 526 million in the previous year [4][5]

Group 1: Company Performance - In the first half of 2025, the company focused on its core business, implementing a strategy of "sales-driven production and efficiency-driven sales," leading to improved profitability [2] - The company has controlled expenses and enhanced compliance governance, resulting in a continuous improvement in profitability for the first half of 2025 [2] Group 2: Market Conditions - The domestic PVC market has shown a fluctuating downward trend, primarily driven by supply-demand imbalances [2] - In early May, PVC prices rebounded due to improved macroeconomic expectations and temporary easing of tariff policies, but prices fell again as market fundamentals took precedence [2] - The viscose staple fiber market is under pressure due to weak end-consumer demand, leading to a decline in procurement enthusiasm among manufacturers [3] - Despite a slight recovery in downstream demand, the overall market remains weak, putting continued pressure on prices [3] Group 3: Project Development - The company is actively promoting project implementation, with the new methanol project expected to be operational in 2025, currently producing qualified products [3] - The BDO project is still under construction, with production balance and auxiliary facilities being progressively put into operation [3] Group 4: Production Capacity - The company has a total PVC production capacity of 2.6 million tons/year, distributed as follows: Fukang Energy 920,000 tons/year, Huatai Heavy Chemical 830,000 tons/year, Tuokexun Energy Chemical 300,000 tons/year, and Shengxiong Energy 550,000 tons/year [3] - The total caustic soda production capacity is 1.86 million tons/year, with Fukang Energy at 660,000 tons/year, Huatai Heavy Chemical at 580,000 tons/year, Tuokexun Energy Chemical at 220,000 tons/year, and Shengxiong Energy at 400,000 tons/year [3] - The viscose fiber production capacity totals 880,000 tons/year, with Kurle Textile at 390,000 tons/year, Alar Textile at 340,000 tons/year, and Xingtai Fiber at 150,000 tons/year [3]