Hong Kong stock market concept tracking | Air conditioner production data in the first half of the year exceeds expectations, demand for third-generation refrigerants remains strong (with concept stocks)

Recently, the Ministry of Ecology and Environment of China released the "2025 Annual Quota Setting and Distribution Plan for Substances Depleting the Ozone Layer" and the "2025 Annual Quota Setting and Distribution Plan for Hydrofluorocarbons". A research report from Dongguan Securities pointed out that the draft plan for setting and distributing the total quota for third-generation refrigerants in 2025 maintains policy continuity and stability, while also considering industry development needs and supply chain security, increasing quotas for varieties with growing demand. The quota for second-generation refrigerants in 2025 will be accelerated to be reduced, with a cut of 18% in production quotas for R22, but short-term demand for air conditioning maintenance is expected to remain stable, which is favorable for an increase in R22 prices. Guotai Junan stated that in the first half of 2024, air conditioning production data exceeded expectations, leading to greater use of quotas and tight supply for R32. The issuance of this document increases the remaining portion of production quotas for internal use, allowing for an increase in production quotas for R32 within the year, thereby moderately relaxing supply to ensure refrigerant price stability. Guotai Junan Securities research believes that in the initial stage of quota policy implementation, there may be disruptions in supply and demand for third-generation refrigerants. The increase in remaining quotas reflects the strong market demand for third-generation refrigerants, and the increase is to adapt to market demand, optimize resource allocation, and will not fundamentally affect the policy and industry trends of third-generation refrigerants in the short term. Leading refrigerant companies: DONGYUE GROUP (00189): Its subsidiary Shandong Dongyue Silicone Material is expected to achieve a profit in the first half of the year, with an estimated attributable net profit of approximately 62-68 million RMB, compared to a loss of 192 million RMB in the same period last year. This is mainly due to an increase in product production, sales volume, and operating income during the period, as well as a decrease in unit production costs and an increase in gross profit margin. DONGYUE GROUP has the highest R22 production capacity globally. In addition, DONGYUE GROUP's refrigerant products also include over 10 varieties such as R32, R125, R134a, all of which have seen price increases to varying degrees since this year.