Investment Rating - The investment rating for the company is "Buy" [5][7][17] Core Views - The company reported a revenue of 2.526 billion yuan in Q2 2025, representing a year-on-year increase of 20% but a quarter-on-quarter decrease of 4% [5][13] - The net profit attributable to the parent company for the same period was 252 million yuan, with a projected revenue growth of 29.0%, 24.5%, and 26.5% for 2025, 2026, and 2027 respectively [5][17] - The company is expected to benefit from capacity expansion and product technology upgrades, which are anticipated to support future revenue growth [5][17] Summary by Sections Financial Performance - In Q2 2025, the main business revenue was 2.45 billion yuan, a year-on-year increase of 21.5% [14] - The company achieved a gross margin of 19.2%, which is a year-on-year decline of 2.2 percentage points but a quarter-on-quarter increase of 1.2 percentage points [15] - The net profit margin for Q2 2025 was 10.0%, down 1.8 percentage points year-on-year [15] Growth Drivers - The number of new projects has shown strong performance, with 486 ongoing and 282 newly added projects in H1 2025 [14] - The company has accelerated capacity construction, adding significant production capacity across various product lines, which is expected to support future revenue growth [14] Research and Development - The company invested 160 million yuan in R&D in Q2 2025, a quarter-on-quarter increase of 22.5%, ensuring product upgrades and progress [16] - Key products have successfully entered mass production for multiple client projects, reinforcing the company's leading position in the market [16] Profitability Forecast - The company is projected to achieve revenues of 12.82 billion yuan, 15.95 billion yuan, and 20.18 billion yuan for 2025, 2026, and 2027 respectively, with corresponding net profits of 1.46 billion yuan, 1.87 billion yuan, and 2.42 billion yuan [17][18]

Core Insights - The online consumption power of male users in China is increasing, particularly among those under 30, with a notable rise in high-end spending over 2000 yuan, driven by self-indulgent and stress-relief consumption needs in gaming, trendy toys, sports, and technology products [1][3] Group 1: Gaming - Male users account for nearly 70% of the gaming market, with the industry experiencing sustained growth during the summer season [1][3] - In May 2025, a total of 144 game licenses were issued, marking a new monthly high, which is expected to boost search traffic for gaming on platforms like Baidu starting in July [3] Group 2: Trendy Toys - The domestic IP toy market is growing robustly, with sci-fi mecha IPs being particularly popular among male consumers [1][3] - EDC (Everyday Carry) products have emerged as a rapidly growing segment, with 80% of EDC users being male, and sales during the 2025 618 shopping festival saw over a fourfold year-on-year increase [3] Group 3: Sports - Males are the primary audience for sports viewership, and there is a continuous increase in fitness-related demands [1][3] Group 4: Technology Consumption - Young and middle-aged males exhibit dual characteristics of tech-savvy and quality-oriented consumption, with rapid growth in outdoor cameras and gaming consoles [1][3] - By April 2025, the monthly active user (MAU) count for male users in China is projected to reach 634 million, reflecting a 2.2% year-on-year increase [1]

Report Title - The report is titled "Polyvinyl Chloride (PVC) Market Weekly Report" [3] Report Date - The report is dated June 20, 2025 [2] Report Industry Investment Rating - No industry investment rating is provided in the report Core Viewpoints - International oil prices strengthened due to the worsening Israel-Iran conflict, driving up the prices of PVC ethylene-based raw materials and causing the PVC futures market to fluctuate upwards this week. As of June 20, 2025, the V2509 contract closed at 4,903 yuan/ton, up 0.91% from last week's close [9] - On the supply side, some PVC plants in Henan and Xinjiang underwent maintenance this week, leading to a 0.63% decrease in the PVC capacity utilization rate to 78.62%. On the demand side, the downstream PVC operating rate decreased by 1.49% to 44.31%, with the pipe and profile operating rates both declining. In terms of inventory, the PVC social inventory decreased by 0.74% to 56.93 tons, with a slowdown in the destocking trend and relatively low inventory pressure [9] - The domestic PVC industry is currently in a period of intensive maintenance. New Pufa Chemical has plans to shut down two sets of equipment with a total capacity of 500,000 tons in late June, and the capacity utilization rate is expected to continue to decline. The domestic downstream demand is in the off-season, and the Indian market is affected by uncertainties such as BIS certification, anti-dumping duties, and the rainy season. In terms of cost, some calcium carbide plants will resume production next week, but the supply in the northwest region is restricted by production cuts. The possibility of the United States participating in the Israel-Iran conflict is increasing, and international oil prices may fluctuate strongly, driving up the prices of ethylene-based raw materials. Considering that the domestic PVC production is mainly based on the calcium carbide process, the PVC futures market is less sensitive to oil prices than LLDPE and PP. Overall, the V2509 contract is expected to fluctuate strongly next week, with resistance around 4,980 yuan/ton [9] Summary by Directory 1. Weekly Highlights - Price: International oil prices strengthened, driving up the prices of PVC ethylene-based raw materials and causing the PVC futures market to fluctuate upwards. As of June 20, 2025, the V2509 contract closed at 4,903 yuan/ton, up 0.91% from last week [9] - Fundamentals: Supply - Some PVC plants in Henan and Xinjiang underwent maintenance, with the capacity utilization rate decreasing by 0.63% to 78.62%. Demand - The downstream PVC operating rate decreased by 1.49% to 44.31%, with the pipe and profile operating rates declining by 2.81% and 1.3% respectively. Inventory - The PVC social inventory decreased by 0.74% to 56.93 tons, with a slowdown in the destocking trend. Cost - The prices of calcium carbide and ethylene-based raw materials increased, with the average national cost of the calcium carbide process rising to around 5,052 yuan/ton and that of the ethylene process rising to 5,596 yuan/ton. The profit of the calcium carbide process slightly improved, while the loss of the ethylene process deepened [9] - Outlook: The domestic PVC industry is in a period of intensive maintenance. New Pufa Chemical has plans to shut down two sets of equipment with a total capacity of 500,000 tons in late June, and the capacity utilization rate is expected to decline. The domestic downstream demand is in the off-season, and the Indian market is affected by uncertainties. Next week, some calcium carbide plants will resume production, but the supply in the northwest region is restricted. International oil prices may fluctuate strongly, driving up the prices of ethylene-based raw materials. The V2509 contract is expected to fluctuate strongly next week, with resistance around 4,980 yuan/ton [9] 2. Futures and Spot Markets Futures Market - The V2509 contract fluctuated upwards this week, and the number of registered warehouse receipts remained stable [10] - The trading volume of the main contract fluctuated slightly, and the 9 - 1 spread weakened slightly [14] Spot Market - CFR China quoted at $710/ton (unchanged), Southeast Asia quoted at $670/ton (unchanged), and India quoted at $720/ton (up $10/ton) [21][25] - The spot prices of calcium carbide-based and ethylene-based PVC in East China increased this week [28] - The basis fluctuated within a range, and the futures market remained in a contango state [32] 3. Industry Situation Upstream - The price of semi-coke remained stable, while the price of calcium carbide increased. The operating rates of semi-coke and calcium carbide were 55.89% and 63.10% respectively [36][41] - The CIF price of VCM was $520/ton, and the international price of EDC was $176/ton [45] Supply - The PVC production capacity is expected to grow by 10.77% in 2025, and the output in May was 2.0197 million tons, showing a month-on-month increase [49] - The PVC capacity utilization rate decreased this week [53] Demand - The operating rates of PVC pipes and profiles decreased this week [57] - The export volume of PVC flooring increased in April [61] - The export volume of PVC decreased in April, while the import volume increased significantly [64] Inventory - The PVC social inventory decreased on a month-on-month basis [69] Cost - The costs of both the calcium carbide process and the ethylene process increased this week [73] Profit - The losses of both the calcium carbide process and the ethylene process deepened this week [80] 4. Options Market Analysis - The 20-day historical volatility of PVC was reported at 15.01%, and the implied volatilities of at-the-money call and put options were 21.51% [85]

Core Insights - The launch of LABUBU has sparked a new wave of offline "real-life combat" among collectors, with original figures priced at 69 selling for multiples of that in the resale market, indicating a high collectible value akin to "plastic Maotai" [1] - The overall sales of trendy toys surged during the 618 shopping festival, with May sales on major e-commerce platforms exceeding 40 billion yuan, and Taobao/Tmall accounting for over 28 billion yuan, reflecting a year-on-year growth of 31.4% [1] - The explosive growth of trendy toys is attributed to the unprecedented purchasing power of Generation Z, along with enhanced online content dissemination and ecosystem incubation, transforming trendy toys from a niche hobby into mainstream consumption [1] Market Trends - The online explosion of trendy toys relies on both market insight and a supportive ecosystem [3] - The year 2016 marked a significant turning point for trendy toys, with Pop Mart signing Molly, establishing itself as a leading brand in the domestic market [4] - Initially, the mainstream perception was that consumers prioritized practicality over seemingly useless items, viewing trendy toys as mere handcrafted "novelty crafts" [5] E-commerce Dynamics - Taobao was one of the first platforms to recognize the potential of trendy toys, prioritizing them as a key category around 2017, and later defining them as an independent industry in 2021 [6] - The establishment of a robust ecosystem, from IP incubation to logistics, is crucial for the success of trendy toys, with platforms investing in AR experiences to enhance consumer engagement [8] Future Growth Directions - Future growth in the trendy toy sector is expected to stem from three main areas: AI integration, penetration into lower-tier markets, and targeting male consumers [10] - AI is reshaping the play experience, with toys evolving into "digital companions" that enhance emotional interaction and playability [11] - Lower-tier markets present significant growth potential, with a penetration rate of under 20% but a growth rate of 45%, driven by increasing consumer spending power and lower rental costs compared to first-tier cities [13] Consumer Demographics - The male demographic is showing increased purchasing power, particularly in categories like EDC and military models, with a notable rise in high-end EDC toy sales during the 618 shopping festival [15][16] - Trendy toys are expanding from children to adults, with a significant portion of the consumer base now comprising older generations seeking emotional fulfillment through these products [18] - The appeal of trendy toys lies in their ability to serve as cultural containers that encapsulate collective memories and individual emotions, making this an opportune time for the trendy toy sector [18]

1. Report Industry Investment Rating - No relevant information provided 2. Core Viewpoints of the Report - Affected by the reduction of Sino - US tariffs, the PVC futures price fluctuated and rose this week. The V2509 contract closed at 4,947 yuan/ton on May 16, 2025, up 2.96% from last week's close [9]. - In terms of fundamentals, on the supply side, some PVC production facilities were shut down for maintenance this week, and the capacity utilization rate decreased by 2.64% to 77.70%. On the demand side, the downstream start - up rate increased by 0.46% to 46.45%, with the pipe start - up rate up 0.93% to 49.06% and the profile start - up rate remaining stable at 35.9%. As of May 15, the social inventory of PVC decreased by 3.23% to 630,000 tons, and the inventory pressure was not significant. The costs of both calcium carbide method and ethylene method decreased, and the profits of the two methods were repaired to varying degrees [9]. - Looking ahead, next week, there will be both shutdown and restart of facilities, and the capacity utilization rate is expected to fluctuate slightly, with generally low supply pressure. Affected by macro - positive factors, the domestic downstream start - up rate has rebounded, but the weak real estate market still drags down demand growth. In terms of exports, the Indian market is affected by uncertainties such as BIS certification and anti - dumping duties and the rainy season, and the unresolved tariffs imposed by the US on Vietnam may affect China's PVC raw material exports. The calcium carbide price may fluctuate, and the ethylene price may fluctuate slightly within a range. The V2509 contract is expected to fluctuate in the short term, with support around 4,900 and resistance around 5,100 [9]. 3. Summary by Directory 3.1 Week - on - Week Summary - Price: The PVC futures price fluctuated and rose due to the reduction of Sino - US tariffs. The V2509 contract closed at 4,947 yuan/ton on May 16, 2025, up 2.96% from last week [9]. - Fundamentals: Supply side - some facilities were shut down for maintenance, and the capacity utilization rate decreased by 2.64% to 77.70%. Demand side - the downstream start - up rate increased by 0.46% to 46.45%, with the pipe start - up rate up 0.93% to 49.06% and the profile start - up rate remaining stable at 35.9%. As of May 15, the social inventory decreased by 3.23% to 630,000 tons. The costs of calcium carbide method and ethylene method decreased, and the profits were repaired [9]. - Outlook: Next week, the capacity utilization rate is expected to fluctuate slightly, with low supply pressure. The domestic downstream start - up rate has rebounded, but real estate drags down demand. Exports face challenges. Calcium carbide and ethylene prices may fluctuate. The V2509 contract is expected to fluctuate in the short term, with support at 4,900 and resistance at 5,100 [9]. 3.2 Futures and Spot Markets 3.2.1 Futures Market - Futures price and warehouse receipts: The V2509 contract fluctuated and rose, and the number of registered warehouse receipts increased week - on - week [10]. - Position and spread: The position of the main contract decreased week - on - week, and the 9 - 1 spread was slightly stronger [14]. 3.2.2 Spot Market - Spot price - imports and exports: The CFR China quotation was 700 US dollars (+0), and the Southeast Asian quotation was 670 US dollars (+0) [20]. - Spot price - overseas: The Indian quotation was 700 US dollars (+0) [25]. - Spot price - domestic calcium carbide method and ethylene method: The prices of calcium carbide method and ethylene method in East China increased week - on - week [28]. - Basis: The basis fluctuated, and the futures market remained in a contango state [33]. 3.3 Industry Situation 3.3.1 Upstream - Lanthanum coke and calcium carbide: The prices of lanthanum coke and calcium carbide remained stable this week. The lanthanum coke start - up rate was 54.13%, and the calcium carbide start - up rate was 64.38% [37][43]. - EDC and VCM: The VCM CIF intermediate price was 520 US dollars/ton, and the EDC international price was 162 US dollars/ton [47]. 3.3.2 Industry Chain - Supply - capacity and output: The PVC capacity growth rate in 2025 is expected to be 10.77%. The output in March was 2.0691 million tons, a month - on - month increase [51]. - Supply - capacity utilization and maintenance: The PVC capacity utilization rate decreased week - on - week [55]. - Demand - downstream start - up rate: The pipe start - up rate increased week - on - week, and the profile start - up rate remained stable [59]. - Demand - PVC floor exports: The PVC floor exports in March increased month - on - month [63]. - Imports and exports: Exports in March increased month - on - month, and imports increased month - on - month but remained at a low level [66]. - Inventory: The PVC social inventory decreased week - on - week [70]. - Cost: The calcium carbide method cost decreased slightly, and the ethylene method cost decreased week - on - week [74]. - Profit: The process profits of the calcium carbide method and ethylene method were repaired this week [80]. 3.4 Options Market Analysis - Volatility: The 20 - day historical volatility of PVC was 17.90%. The implied volatility of at - the - money call options was 19.89%, and that of put options was 19.93% [85].

Financial Data and Key Metrics Changes - The company is increasing its cost reduction target to $50 million to $70 million for the full year 2025 related to productivity and structural cost improvements [8] - First quarter adjusted EBITDA comparison from Q4 2024 to Q1 2025 shows that Chlor Alkali Products and Vinyls business benefited from delaying maintenance, resulting in higher sales than expected [26] - Operating cash flow for Q1 2025 was negatively impacted by normal seasonal working capital growth, but the company expects working capital to be a source of cash flow for 2025 [29] Business Line Data and Key Metrics Changes - Chlor Alkali Products and Vinyls business saw increased chlorine and caustic volumes, with expectations for caustic to remain the stronger side of the ECU [13][14] - The Winchester division experienced growth in domestic and international military ammunition volume, while commercial sales were weak due to destocking by retailers [20][21] - Epoxy sales improved sequentially, but margin benefits were offset by higher costs, with expectations for continued challenges in 2025 [16][18] Market Data and Key Metrics Changes - The company noted stable ECU values with positive pricing trends into the second quarter, particularly for caustic soda [10][32] - The commercial ammunition market is currently challenged, with mid-single-digit pullbacks in sporting goods and hunting sales [21] - The company expects caustic prices to rise and sees seasonal recovery in demand for bleach and caustic soda [32] Company Strategy and Development Direction - The company is focused on a value-first commercial approach and has made progress in implementing its Winchester growth strategy [11][12] - The acquisition of Ammo Inc. is expected to enhance growth potential for Winchester, with synergies anticipated [24][72] - The company is exploring long-term strategic opportunities in PVC and is committed to maintaining a disciplined capital allocation framework [15][84] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the economic environment, noting that while uncertainty exists, customers are not expressing significant negativity [68] - The company expects adjusted EBITDA for Q2 2025 to be in the range of $170 million to $210 million, including a $40 million sequential chemicals turnaround expense headwind [34] - Management remains bullish on the future of Winchester's earnings, anticipating a strengthening in the business over the next 12 to 18 months [72] Other Important Information - The company successfully refinanced its nearest debt tranche, extending maturities to 2029, which positions it well to weather economic uncertainty [10] - A new board member, retired U.S. Army General Edward M. Daley, was elected to provide strategic guidance [36] Q&A Session Summary Question: Update on volume and price outlook for chlorovinyl - Management noted continued weakness in EDC pricing but expects positive pricing trends for caustic and seasonal improvements in Q2 [38] Question: Cash positive status of current PVC arrangement - Management confirmed that the current PVC arrangement is cash positive and plans to ramp up tolling volumes [41] Question: Operating rates in Q1 - Management indicated that operating rates were elevated in Q1 due to increased spot demand, but rates are expected to return to normal in Q2 [46] Question: Year-over-year EBITDA decline for Winchester - Management expects a modest improvement in Winchester for Q2, with the decline primarily driven by lower commercial demand and higher costs [53][55] Question: Capacity overhang in epoxy - Management acknowledged significant capacity overhang in epoxy, particularly in Asia, and expects continued struggles in 2025 [57] Question: Structural profitability of Winchester - Management indicated that Winchester is currently in a trough but remains optimistic about future growth due to recent acquisitions and contracts [70][72] Question: Increased cost-cutting target - Management clarified that the increased cost-cutting target for 2025 includes both accelerated structural savings and productivity improvements [80] Question: Capital spending reduction - Management confirmed that the reduction in capital spending for 2025 does not change the long-term average spending target [84] Question: Purchase price for Ammo Inc. - Management explained that the lower purchase price was due to effective negotiations and lower working capital at closing [89]

Financial Data and Key Metrics Changes - Total revenue for Q4 was $721 million, with non-GAAP operating income of $308 million. For the full year, total revenue reached $2.75 billion, and non-GAAP operating income was $1.15 billion, indicating strong performance above guidance [9][10]. - The company set a revenue goal of $6 billion for FY 2030, reflecting significant growth opportunities ahead [10]. Business Line Data and Key Metrics Changes - The company reported that 17 of the top 20 pharmaceutical companies are using its Clinical Trial Management System (CTMS), indicating a trend towards standardization on Veeva's innovative products [23][24]. - The success of eTMF and CTMS is expected to lead to broader adoption of other products in the clinical suite, such as study training and site connect, which are deeply integrated with CTMS and eTMF [26][28]. Market Data and Key Metrics Changes - The company noted that life sciences is generally resilient to economic cycles, which may buffer against potential disruptions in research funding and regulatory changes [20][21]. - The company is seeing increased interest in its data cloud offerings, particularly the COMPAS product, which is expected to resonate with smaller market companies needing integrated patient and prescriber data [37][40]. Company Strategy and Development Direction - Veeva is focusing on expanding its product offerings and enhancing its AI capabilities, with plans to centralize its AI development to improve core competencies [53][54]. - The company is committed to maintaining a customer-centric approach, emphasizing the importance of integrated solutions to enhance efficiency and speed in clinical operations [94][95]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, noting that while there are uncertainties in the regulatory environment, there has been no significant impact on customer decision-making processes so far [19][21]. - The company is focused on capturing market share in the EDC space and is looking ahead to innovate further once a larger market presence is established [61][62]. Other Important Information - The company is investing significantly in R&D while maintaining a focus on operational efficiency, which is expected to drive margin improvements [42][126]. - The management highlighted the importance of automation in data migration processes to facilitate smoother transitions for clients [111]. Q&A Session Summary Question: Insights on large pharma's procurement strategies - Management noted that the decision by a top 20 customer to consolidate around Veeva was driven by the need for speed and efficiency rather than risk avoidance [12][14]. Question: Impact of research funding changes - Management indicated that it is too early to predict the impact of potential changes in research funding on customer behavior, but life sciences tend to be resilient to such changes [18][20]. Question: Success of eTMF and CTMS - Management confirmed that the success of these products is leading to increased interest in other offerings within the clinical suite, with a focus on customer success and faster implementations [27][29]. Question: Momentum in data cloud offerings - Management reported growing interest in the data cloud, particularly the COMPAS product, and is optimistic about future expansion opportunities [35][37]. Question: AI product development - Management acknowledged the rapid development of AI solutions and the importance of focusing on specific use cases to enhance workflow efficiency [46][54]. Question: Competitive landscape for EDC - Management emphasized the structural advantages of their integrated systems over competitors, noting that they have secured nine out of the top 20 customers for EDC [60][61]. Question: Timeline for Vault CRM commitments - Management indicated that discussions with top 20 customers are progressing well, with expectations for more announcements in 2025 and decisions largely expected by the end of 2026 [64][68]. Question: Consultant bandwidth for Vault CRM transitions - Management expressed confidence in their service team's ability to flexibly meet demand and emphasized investments in automation to streamline data migration processes [108][111]. Question: Concerns about tariffs and supply chain disruptions - Management noted that while there are ongoing discussions about tariffs, there has been no significant impact on contract signings yet, but it remains a potential concern [113][115]. Question: Opportunities in safety applications for AI - Management highlighted the unique position of their cloud-integrated safety applications and the potential for AI to enhance these offerings [119][121].