Great Sun Group (01907): Business scale grows in an orderly manner, global layout strengthens long-term development foundation.

For the global economy, 2024 can be considered a challenging year due to the intertwining complexity and uncertainty. It is undeniable that the challenging market environment has disrupted the growth rhythm of many companies. However, from a long-term perspective, market pressure testing may not necessarily be a bad thing for high-quality companies. On the contrary, external challenges may accelerate the self-breakthrough and evolution of high-quality companies. GMTEight has noticed that despite facing certain pressures, CHINA RISUN GP (01907) has continued to maintain a steady pace of operation in the industry downturn period. The company has also adopted an enterprising attitude to capture new business opportunities and has begun to cultivate new growth drivers. Consolidating strength for steady progress Recently, CHINA RISUN GP disclosed its performance for 2024. The financial report shows that Under adverse conditions, the Sun Group achieved revenue of 47.543 billion yuan, maintaining a steady development momentum in business scale. At the same time, in the context where the entire industry generally faced loss, the Sun Group maintained its profit bottom line, achieving a net profit of 98 million yuan for the full year. The resilience of the fundamentals is closely related to the Sun Group's effective initiatives to consolidate the competitive edge of its traditional core business while fully tapping the growth potential of the chemical sector as the second growth curve, and orderly promoting the further development of the hydrogen energy business, among a series of effective measures. In 2024, benefiting from the Sun Group's continued deepening of its national layout and global expansion strategy, the company's volume of coking business and refined chemical production continued to grow. In terms of coking business, the company achieved revenue of 17.642 billion yuan for the full year. During the year, affected by market price fluctuations, the average selling price of coking at the Sun Group was 1,847.7 yuan per tonne (excluding taxes), experiencing a slight decline compared to the previous year. However, the Sun Group actively demonstrated subjective initiative to overcome external unfavorable factors. On the one hand, the Sun Group controlled the blending coal price through various effective means, thus controlling the coal coke price differential. Data shows that in 2024, the coal coke price differential at the Sun Group was maintained at about 300 yuan per tonne or more; on the other hand, the Sun Group also actively attempted to reduce various production costs by tapping internal potential to increase per capita output and labor efficiency, thereby amplifying the advantages of low cost. As the second pillar industry of the Sun Group, the fine chemical sector has continued to contribute substantial increments to the company after its revenue and profits surpassed the coking sector for the first time in 2023. During the reporting period, the revenue from the production of fine chemical products at the Sun Group reached 20.729 billion yuan, a year-on-year increase of 11.1%. In the year, the company's solid hexanediol export volume reached 47,500 tons, a 200% year-on-year increase, hitting a new historical high; high-end polyimide resin material solved the bottleneck problem of hexane diamine; and high value-added amino alcohol new materials were also released as scheduled during the year, bringing new profit growth points. It is evident that as the fine chemical business develops and expands, the company's confidence in combating cyclical fluctuations has also strengthened. In 2024, the Sun Group continued to provide professional operation and management services to the industry, achieving rapid expansion through a light-asset approach. Throughout the year, the total scale of the company's operation and management services reached 8.86 million tons, a year-on-year increase of 114%, and the business volume reached 6.51 million tons, a year-on-year increase of 45.6%. Reflected on the financial statement, during the period, the Sun Group's operation and management services business contributed revenue of 4.225 billion yuan, a year-on-year increase of 109.5%; at the same time, the gross profit of this division increased by 42.1% year-on-year, becoming the third curve in the group's profit growth. Furthermore, it is worth mentioning that in the past year, the Sun Group's hydrogen energy business has also made significant progress. According to public information, in 2024, the Sun Group's high-purity hydrogen business volume grew significantly, with annual sales reaching 20.1 million cubic meters, marking a historic high in hydrogen gas sales; based on the production and sales volume in 2024, the Sun Group is currently the second-largest high-purity hydrogen supplier in the country. Traditional business recovery expected, new business accelerating to "take over" In the two sessions that ended earlier this month, the government work report demonstrated the determination of the decision-makers to seek progress in stability and actively move forward. The economic growth target of around 5% highlighted a clear orientation of overcoming difficulties and striving for progress, while the record-breaking fiscal deficit rate of 4% indicated that the momentum of economic growth is likely to significantly strengthen. GMTEight believes that a more proactive fiscal policy could effectively boost downstream demand and industry sentiment in the black series, and the advantage business of the Sun Group is expected to officially bottom out and recover in 2025. Looking towards 2025, the Sun Group's global competitiveness is expected to be further strengthened. Last year, the Sun Group's Indonesian site achieved coking sales of 2.283 million tons, with products exported to 13 countries and 28 customers worldwide; overseas sales of solid hexanediol achieved rapid and continuous growth of two digits; high value-added amino alcohol new materials achieved full-scale production and sales at the pilot plant, and it is expected that the 5,000 tons/year amino alcohol industrialization project currently under construction will be put into operation in the short term, making a larger contribution to the group's performance. Looking into 2025 and beyond, the Sun Group will capitalize on the national strategy to accelerate the establishment of a dual-cycle development pattern for the domestic and international economies, and continue to firmly and comprehensively implement and accelerate the "Sun Business National Layout + Global Exploration" strategy. Based on the group's first overseas manufacturing base on Sulawesi Island, Indonesia, the Sun Group will actively research and plan for overseas projects, such as downstream fine chemical, and increase the establishment of more overseas subsidiaries and offices. Currently, new offices in the Middle East and Mongolia are actively preparing. By building a global marketing network, establishing global industrial chains, supply chains, customer chains, and sales chains, and forming a global competitive and service-oriented system, the internationalization journey of the Sun Group will inevitably advance into a new development stage. On March 12th of this year, the Sun Group signed a framework agreement with Beijing SINOHYTEC for the issuance of shares for the purchase of assets business and the raising of matching funds. According to the current transaction plan, after the completion of this transaction, the controlling shareholder of SINOHYTEC is expected to change to the Sun Group. With the two strong companies joining forces, the hydrogen energy industry landscape is expected to be reshaped: in the future, if the transaction can be completedAs the controlling shareholder of SINOHYTEC, Xuyang Group can fully leverage its industrial advantages and operational management advantages, lead deep integration of resources between the two parties, promote complementary advantages across the entire hydrogen energy industry chain, and even build a billion-dollar ecological closed-loop through business expansion. With the continuous development of the hydrogen energy industry, Xuyang Group is also expected to cultivate new performance growth poles outside of the coking coal and chemical industries.In the new year, Xuyang Group will continue to transform and upgrade towards a service-oriented and innovative enterprise. According to information disclosed by the company, the business scale target of Xuyang coking coal operation management services this year is to increase by another 10 million tons to reach 18.2 million tons, and the business scale target for chemical operation management services is to increase by another 1 million tons to reach 1.66 million tons. With business steadily expanding, it can be expected that the positive impact of operation management services on Xuyang Group's performance will be further amplified. A diversified layout nurtures long-term growth momentum, and the proactive Xuyang Group has also attracted more attention from Southbound funds. Public data shows that the proportion of Xuyang held by the Hong Kong Stock Connect has continued to rise this year, from 6.78% at the beginning of the year to around 7% now. It is believed that with the gradual recovery and return to an upward trend in Xuyang Group's performance, the journey of the company's stock value returning will come soon.