According to the Zhitong Finance APP, China International Capital Corporation (CICC) released a research report stating that in 1H25, the revenue of petrochemical and chemical listed companies was 1.8 trillion yuan, a year-on-year decrease of 0.6%; gross profit was 287.4 billion yuan, a year-on-year increase of 0.4%; and net profit attributable to shareholders was 87.6 billion yuan, a year-on-year decrease of 1.9%. Capital expenditure in 1H25 decreased by 15.1% year-on-year, with a quarter-on-quarter decrease of 12.2%/8.3% in 2Q25. Due to the prolonged downturn in the midstream manufacturing sector of chemicals, intensified industry competition, and declining profitability, companies have become increasingly cautious about capital expenditure. With the continued decline in industry capital expenditure and the advocacy of &#34;anti-involution&#34; policies, there are optimistic investment opportunities in leading chemical companies with relatively low valuations and strong earnings growth certainty in 2026, as well as AI-related material companies expected to see rapid demand growth.
<h2>CICC's main viewpoints are as follows:</h2>
1H25 performance meets expectations
In 1H25, the revenue of petrochemical and chemical listed companies was 1.8 trillion yuan, a year-on-year decrease of 0.6%; gross profit was 287.4 billion yuan, a year-on-year increase of 0.4%; and net profit attributable to shareholders was 87.6 billion yuan, a year-on-year decrease of 1.9%. The global chemical market demand remained weak in 1H25, while trade tariffs in 2Q affected downstream purchasing demand. Additionally, the year-on-year decline in Brent crude oil and coal prices by 15.1%/22.4% led to a year-on-year decrease of 9.7% in the chemical product price index. The gross profit margin of petrochemical and chemical listed companies in 1H25 increased by 0.15 percentage points year-on-year to 16%, while the net profit margin decreased by 0.07 percentage points year-on-year to 4.9%. At the sub-industry level, in 1H25, the net profit attributable to shareholders in sub-industries such as fluorochemicals, surfactants, fiberglass, semiconductor materials, modified plastics, food, and feed additives increased by over 40% year-on-year.
In 2Q25, the revenue of petrochemical and chemical listed companies decreased by 2.2% year-on-year to 925.2 billion yuan; gross profit decreased by 0.9% year-on-year to 148.4 billion yuan; and net profit attributable to shareholders decreased by 9.5% year-on-year to 42.8 billion yuan, with a net profit margin decreasing by 0.37/0.51 percentage points to 4.63%. The average chemical product price index in 2Q25 decreased by 13.4% year-on-year, with the average prices of Brent crude oil and thermal coal decreasing by 21.5%/25.4% year-on-year. The gross profit margin in 2Q increased by 0.21/0.14 percentage points to 16.04%. At the sub-industry level, net profits in industries such as fluorochemicals, fiberglass, surfactants, pesticides, semiconductor materials, potassium fertilizers, and modified plastics increased by over 30% year-on-year.
Development trends
Capital expenditure in 1H25 decreased by 15.1% year-on-year, with a quarter-on-quarter decrease of 12.2%/8.3% in 2Q25. Due to the prolonged downturn in the midstream manufacturing sector of chemicals, intensified industry competition, and declining profitability, companies have become increasingly cautious about capital expenditure. In 1H25, capital expenditure in the petrochemical and chemical industry (excluding state-owned oil and petrochemical enterprises) decreased by 15.1% year-on-year, with capital expenditure in 2Q25 decreasing by 12.2%/8.3% quarter-on-quarter to 74.7 billion yuan. This marks the seventh consecutive quarter of year-on-year decline since 4Q23, and the capital expenditure scale in 2Q25 is the lowest since 4Q20. The growth rate of fixed assets + construction in progress (excluding state-owned oil and petrochemical enterprises) in 2Q25 was 7.4%, the lowest growth rate since 1Q18; the construction in progress (excluding state-owned oil and petrochemical enterprises) in 2Q25 decreased by 10.2% year-on-year
At the company level, in the first half of 2025, TKGF, Hubei Yihua, HYPC, Huayi Group, XfmGroup, and Chlor-Alkali Chemical saw capital expenditures increase by over 1 billion yuan; while Hengli Petrochemical, Sinopec Corp., wanhua, and Dongfang Shenghong experienced a year-on-year decrease in capital expenditures of over 3 billion yuan. At the sub-industry level, in the first half of 2025, capital expenditures in industries such as organic silicon, membrane materials, fiberglass, coatings and inks, dyes, spandex, rubber, and products decreased by over 30% year-on-year.
Risk Factors
Domestic and international macroeconomic growth is lower than expected, trade frictions are intensifying, and bulk energy prices have risen sharply

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CICC released a research report indicating that capital expenditure in the chemical industry will decline by 15.1% year-on-year in the first half of 2025, mainly due to industry downturn, intensified competition, and declining profits. In 1H25, the revenue of listed petrochemical companies reached 1.8 trillion yuan, a year-on-year decrease of 0.6%; net profit attributable to shareholders was 87.6 billion yuan, a year-on-year decrease of 1.9%. It is expected that future investment opportunities will focus on leading chemical companies with low valuations and strong profit growth certainty, as well as AI-related material companies

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HYPC

XfmGroup

TKGF

wanhua

Sinopec Corp.

SINOPEC CORP

CICC: Capital expenditure in the chemical industry continued to decline in H1 2025, with the cyclical turning point approaching