Central China: The chemical industry's performance rebounded overall in the first half of the year, with further improvement in the second quarter on both a year-over-year and quarter-over-quarter basis.

Central China released a research report maintaining the "market perform" investment rating for the basic chemicals industry. In terms of investment strategy for the chemical industry, on the one hand, it recommends sectors that benefit from the anti-involution policy with greater room for supply-side improvement and promising recovery in prosperity, including polyester filament yarn, dyes, organosilicon, and other sub-sectors; on the other hand, it recommends paying attention to new materials sectors such as electronic chemicals and packaging materials. Central China's main points are as follows: In the first half of 2026, the basic chemicals industry's revenue and profit rebounded overall, and the industry's prosperity continued to recover In the first half of 2026, the CITIC basic chemicals industry achieved total revenue of 1,605.362 billion yuan, a year-on-year increase of 23.61%, and achieved net profit of 121.833 billion yuan, a year-on-year increase of 52.97%. In the first half of 2026, both revenue and profit of the basic chemicals industry showed a recovery trend. Compared with the first-quarter report performance, the growth rate in the interim report further increased. In the second quarter of 2026, the revenue and profit of the basic chemicals industry grew significantly year-on-year and continued to improve quarter-on-quarter, with the industry's prosperity continuing to recover. In the first half of 2026, 33 sub-sectors of basic chemicals achieved year-on-year revenue growth, and 27 sub-sectors achieved net profit growth, with the industry as a whole showing a recovery trend Benefiting from factors such as optimization of the industry supply-demand pattern and demand recovery that boosted prosperity, industries including membrane materials, lithium battery chemicals, viscose, nylon, and other plastic products achieved relatively rapid net profit growth. In the second quarter of 2026, most sub-sectors achieved quarter-on-quarter improvement in both revenue and net profit. Industry profitability continued to recover, with gross profit margin improving continuously Since the third quarter of 2023, the basic chemicals industry's prosperity has stabilized at the bottom, and the decline in profitability has slowed. Since 2026, industry profitability has further improved. In the second quarter, the overall gross profit margin of the basic chemicals industry was 20.51%, and the net profit margin was 8.66%, with the gross profit margin reaching a new high since 2023. In the first half of the year, profitability improved in most sub-sectors, with potassium fertilizer, organosilicon, spandex, membrane materials, and carbon fiber among those with relatively large improvements. The overall financial indicators of the basic chemicals industry are robust, and the scale of construction in progress continues to decline In the second quarter of 2026, the asset-liability ratio of the basic chemicals industry was generally stable, and operating cash flow improved quarter-on-quarter. The industry's investment intensity continued to slow, and the scale of construction in progress has continued to decline since the third quarter of 2024. The industry's inventory turnover days decreased slightly year-on-year, and operating capacity improved somewhat. Chemical enterprises in Henan Province generally recovered, with growth rates lower than the industry level In the first half of 2026 and the second quarter, listed basic chemicals companies in Henan Province achieved revenue of 43.044 billion yuan and 22.461 billion yuan, up 14.72% and 19.87% year-on-year; net profit of 2.493 billion yuan and 1.580 billion yuan, up 27.55% and 65.64% year-on-year; gross profit margins were 18.66% and 20.05%, respectively, and net profit margins were 6.31% and 7.64%, respectively. The industry's revenue and profit growth rates were lower than the overall industry level, and profitability was slightly weaker than the overall industry level. Risk warnings: demand falling short of expectations, substantial expansion of industry capacity, and sharp increases in energy prices