Central China: Profit growth rate increased in the first three quarters, and the chemical industry continues its bottom-up recovery.

Central China has released a research report maintaining its investment rating on the basic chemical industry as "synchronized with the overall market". In terms of investment strategies for the chemical industry in the future, on the one hand, it is recommended to focus on sectors with significant improvement potential in the supply side due to policies against overwork, and with high profitability elasticity, including pesticides, organic silicon, polyester filament, and spandex industries; on the other hand, it is recommended to pay attention to the potash fertilizer and phosphate chemical industries with strong resource attributes in the background of the Fed's interest rate cuts. The main points of Central China are as follows: In the first three quarters of 2025, the revenue and profit of the basic chemical industry further increased, and the industry continued its bottom recovery trend In the first three quarters of 2025, the total revenue of the basic chemical industry of CITIC reached 1,992.477 billion yuan, an increase of 5.69% year-on-year, and net profit reached 117.062 billion yuan, an increase of 7.58% year-on-year. The revenue and profit of the basic chemical industry in the first three quarters both maintained an upward trend. Compared with the mid-year performance, the growth rate in the third quarter has significantly improved. In the third quarter of 2025, the revenue and profit of the basic chemical industry showed rapid growth year-on-year and continued to improve month-on-month. In the first three quarters of 2025, the operating income of the 18 sub-industries of the basic chemical industry achieved year-on-year growth, and the net profit of the 18 sub-industries also achieved growth, showing a significant differentiation trend Benefiting from the optimization of the supply-demand pattern and the recovery of demand, the sub-industries such as agricultural chemicals, fluoride chemicals, and new energy-related industries achieved rapid growth in revenue and profit. In the third quarter of 2025, most sub-industries saw an improvement in both revenue and net profit. The profitability of the industry continues to improve As the industry's prosperity declines, the gross profit margin and net profit margin of the basic chemical industry have been continuously declining since 2022. Since early 2024, the industry's profitability has stopped falling and rebounded, and the industry's prosperity has stabilized. In the first three quarters of 2025, the overall gross profit margin of the basic chemical industry was 17.69%, and the net profit margin was 6.17%, both slightly increasing compared to the same period last year. The profitability of sub-industries in the first three quarters has shown differentiation, with significant improvements in sub-industries such as fluoride chemicals, potash fertilizers, synthetic resins, chlor-alkali, and compound fertilizers. The financial indicators of the basic chemical industry are generally healthy, with the scale of construction projects continuing to decline In the third quarter of 2025, the asset-liability ratio of the basic chemical industry decreased slightly from the previous period, maintaining a relatively low level. The industry's operating cash flow significantly improved, fixed asset investment slowed significantly, and the scale of construction projects continued to decline. The industry's inventory turnover days increased slightly year-on-year. Overall decline in chemical enterprises in Henan Province, weaker performance than the industry level In the first three quarters and third quarter of 2025, listed chemical companies in Henan Province achieved revenue of 56.421 billion and 18.898 billion yuan, a year-on-year decline of 2.21% and 1.03%; net profit of 2.832 billion and 788 million yuan, a decline of 29.33% and 26.70%; gross profit margins were 16.61% and 15.61%, net profit margins were 5.02% and 4.17%, showing an overall declining trend, weaker than the industry level. Risk warning: demand lower than expected, significant expansion of industry capacity, significant increase in energy prices.