Yangtze River: The chemical industry's prosperity continued to fluctuate in the first half of the year, with strong tire exports and double growth in revenue and performance.

Changjiang released a research report stating that the chemical industry achieved operating income of 1.23763 trillion yuan in the first half of 2024, a year-on-year increase of 4.2%. The expansion cycle of most chemical products in this round has basically ended, and the supply and demand balance has improved. Overall, the chemical industry experienced a volatile trend in the first half of 2024. In the tire industry, revenue and performance both increased, maintaining a high level of prosperity, with strong domestic demand and continued strong exports. Chinese tire companies have a significant advantage in cost control and global layout. In the phosphorus chemical industry, the supply of phosphorus ore is tight, and the prosperity is expected to continue, with phosphorus fertilizers entering the traditional peak season; in the fluorine chemical industry, with quota policies being implemented, the refrigerant industry saw a significant improvement in the first half of the year. Overall Operation: In the first half of 2024, digesting supply increment, with volatile prosperity and increased performance. In the first half of 2024, the chemical industry achieved operating income of 1.23763 trillion yuan, a year-on-year increase of +4.2%; net profit attributable to shareholders was 75.25 billion yuan, a year-on-year increase of +0.8%. On the export side, overseas markets have entered a restocking cycle and exports have been positive, but since Q2, major economies overseas have weakened, with expectations of interest rate cuts from central banks; on the domestic demand side, real estate continues to decline, and retail data suggests consumption is not meeting expectations. In terms of supply, many chemical products have completed their expansion cycle, leading to a better supply-demand balance. Overall, the chemical industry experienced a volatile trend in the first half of 2024. Tire Industry: Revenue and performance both increase, maintaining a high level of prosperity In the first half of 2024, the tire sector achieved total operating revenue of 50.50 billion yuan, a year-on-year increase of 16.8%, and achieved a net profit attributable to shareholders of 5.74 billion yuan, a year-on-year increase of 72.7%. With strong domestic demand and continued strong exports. Chinese companies have a significant advantage in cost control and global layout. It is recommended to pay attention to the rise of domestic tire companies such as Sailun Group, Shandong Linglong Tyre, Qingdao Sentury Tire, Jiangsu General Science Technology, and GuiZhou Tyre. Phosphorus Chemical Industry: Continued prosperity at the ore end, fertilizers gradually entering a good period In the first half of 2024, the phosphorus chemical sector achieved total operating revenue of 56.33 billion yuan, a year-on-year decrease of 4.2%, and achieved a net profit attributable to shareholders of 4.39 billion yuan, a year-on-year increase of 16.5%. With a tight supply of phosphorus ore, the prosperity is expected to continue, and phosphorus fertilizers are about to enter the traditional peak season. It is recommended to pay attention to high dividend targets such as Yunnan Yuntianhua, Hubei Xingfa Chemicals Group which actively repurchased and completed an employee stock ownership plan, and Guizhou Chanhen Chemical Corporation, a high-growth target for phosphorus ore. Fluorine Chemical Industry: Improved prosperity in the first half of the year with the implementation of quota policies In the first half of 2024, the fluorine chemical sector achieved total operating revenue of 18.06 billion yuan, a year-on-year increase of 20.0%, and achieved a net profit attributable to shareholders of 1.48 billion yuan, a year-on-year increase of 70.9%. With quota restrictions on supply, prosperity is expected to continue to rise. Pay attention to Zhejiang Juhua, Zhejiang Sanmei Chemical Industry, DONGYUE GROUP, and regulators. Polyurethane (PU): Profit under pressure in the first half, prosperity expected to recover In the first half of 2024, the polyurethane sector achieved total operating revenue of 109.32 billion yuan, a year-on-year increase of 10.8%, and achieved a net profit attributable to shareholders of 8.37 billion yuan, a year-on-year decrease of 4.7%. The first half of the year saw good production data in the home appliance sector, but demand in other downstream areas was weak, with limited boost from exports. Looking ahead, the traditional peak season of "Golden September and Silver October" is gradually approaching, with increased expectations of interest rate cuts from central banks, and demand is expected to recover steadily. On the supply side, there will be a period of intensive maintenance in the domestic market, with frequent force majeure incidents in overseas facilities leading to shortages or exacerbation, raising the prospect of increased MDI prosperity. Pay attention to Wanhua Chemical Group. Polyester Filament: Profit recovery by season, peak season approaching In the first half of 2024, the polyester filament sector achieved total operating revenue of 79.49 billion yuan, a year-on-year increase of 22.1%, and achieved a net profit attributable to shareholders of 1.67 billion yuan, a year-on-year increase of 185.7%. Enterprises saw significant improvement in efficiency during the second quarter, but since July, the sharp drop in crude oil prices has led to poor downstream purchasing sentiment, coupled with significant pressure from inventory price declines, resulting in some companies offering promotions. Since mid-August, textile machine loads in Jiangsu and Zhejiang provinces have increased, entering the traditional peak season in September, with demand expected to further improve. Pay attention to Tongkun Group and Xinfengming Group. Titanium Dioxide: Continued high prosperity at the ore end, waiting for the recovery of titanium dioxide In the first half of 2024, the titanium dioxide sector achieved total operating revenue of 22.67 billion yuan, a year-on-year increase of 9.7%, and achieved a net profit attributable to shareholders of 2.22 billion yuan, a year-on-year increase of 49.1%. Looking ahead, global capacity expansion of titanium dioxide is slowing down. With steady growth in global terminal demand and support from upstream raw material prices, the medium to long-term prosperity of titanium dioxide is expected to gradually recover. Focus on LB Group Co., Ltd. Additives: Some base species see a reversal in prosperity In the first half of 2024, the additives sector achieved total operating revenue of 56.19 billion yuan, a year-on-year increase of 7.9%, and achieved a net profit attributable to shareholders of 6.02 billion yuan, a year-on-year increase of 25.3%. Some species such as vitamins have seen a reversal in prosperity due to favorable supply conditions. Pay attention to high-dividend opportunities such as Meihua Holdings Group. Electronic Chemicals: Semiconductor market rebounding, upstream materials expected to increase production In the first half of 2024, the electronic chemicals sector achieved total operating revenue of 34.48 billion yuan, a year-on-year increase of 15.3%, and achieved a net profit attributable to shareholders of 3.68 billion yuan, a year-on-year increase of 32.8%. Semiconductor sales have seen high growth, benefiting demand for electronic gases, wet electronic chemicals, and photoresists. Investment Recommendation: Optimistic about investment opportunities in high-quality chemical assets. Supply and demand are improving, and prosperity is gaining momentum. It is recommended to pay attention to investment opportunities in high dividend, high alpha, high elasticity, high growth, and growth stocks. Risk Warning 1. Demand falls short of expectations; 2. Project progress falls short of expectations; 3. Operational risks related to safety and environmental protection; 4. Increased competition risks.