Zhongjin: The profitability and valuation of the chemical industry are both at low levels, and the industry turning point is approaching.

The report on the outlook for the second half of 2025 by CITIC Securities Oil and Gas Chemicals pointed out that the current domestic chemical product price index, profit margin, and industry valuation are all at relatively low levels. Global demand for chemical products is still weak, but domestic chemical industry capital expenditures continue to decline, overseas backward production capacity is accelerating its exit, and policies have repeatedly emphasized "anti-internal competition," indicating that the industry supply is expected to gradually see positive changes. Currently, there are no expectations for "anti-internal competition" policies in the petrochemical industry, but overall industry profitability is under pressure, and companies are eager to improve profitability. The report believes that the successful implementation of "anti-internal competition" policies in other sectors is expected to boost market expectations for chemical companies to voluntarily promote "anti-internal competition," benefiting the return of the valuation of the petrochemical industry. In terms of specific investment strategies, it is optimistic about: core assets in the chemical industry; new materials.