【Zhongyuan Morning Meeting 0317】Market Analysis: Shipping and Semiconductors Lead Gains, Lithium Battery Industry Monthly Report: Short-term Sales Decline, Baofeng Energy Annual Report Commentary Special Research

Notice

The “Measures for the Management of Suitability of Securities and Futures Investors” has been officially implemented since July 1, 2017. The information produced in this subscription account through new media formats is only available to professional investors in financial institutions among Zhongyuan Securities clients. If you are not a professional investor in a financial institution among Zhongyuan Securities clients, to ensure service quality and control investment risks, please unfollow this subscription account and do not subscribe to, accept, or use any information from this account. Due to the current inability to set access restrictions on this account, we apologize for any inconvenience caused.

Note: If there is any ambiguity in the audio, please refer to the official research report.

This issue’s key research reports

【Zhongyuan Strategy】Market Analysis: Shipping and Semiconductors Lead Gains, A-shares Fluctuate and Consolidate

【Zhongyuan Lithium Batteries】Monthly Report on Lithium Battery Industry: Short-term Sales Decline, Sector Continues to Focus

【Zhongyuan Chemicals】Baofeng Energy (600989) Annual Report Review: Inner Mongolia Projects Achieve Full Production, Oil Price Rise Highlights Coal Chemical Advantages

Main Content

【Zhongyuan Strategy】

Market Analysis: Shipping and Semiconductors Lead Gains, A-shares Fluctuate and Consolidate

On Monday, the A-share market initially declined then rebounded slightly, showing a small range of consolidation. The indices opened lower in the morning and then fell back, with the Shanghai Composite Index around 4048 points supported. In the afternoon, the market stabilized and rebounded, with semiconductor, passenger vehicle, shipping ports, and liquor sectors performing well; coal, steel, precious metals, and energy metals sectors underperformed. Throughout the day, the Shanghai Composite and ChiNext indices traded in a narrow range, showing slight fluctuations. Currently, the average P/E ratios of the Shanghai Composite and ChiNext are 16.89x and 48.94x, respectively, above the median levels of the past three years, suitable for medium- to long-term investment. The total trading volume on Monday was 2.34 trillion yuan, above the median daily volume of the past three years. The core pressure on the market comes from overseas, with escalating Middle East tensions causing global market turbulence. Rising oil prices raise concerns about stagflation, dampening risk appetite. This has delayed expectations of Fed rate cuts, increased U.S. bond yield volatility, and suppressed valuations of global equities, especially high-valuation tech growth stocks. However, the further clarification of domestic macro policies provides a solid bottom support for the market. The central bank has clarified its flexible use of RRR cuts and interest rate adjustments to maintain ample liquidity; it also supports China Investment Corporation to play a quasi-“stabilization fund” role, boosting market confidence. The Shanghai Index is likely to remain in a slight consolidation, and investors should closely monitor macroeconomic data, overseas liquidity, and policy developments. In the short term, focus on investment opportunities in semiconductors, passenger vehicles, shipping ports, and consumer sectors.

Risk Warning: Overseas unexpected recession affecting domestic economic recovery; domestic policy and economic recovery slower than expected; macroeconomic shocks exceeding expectations; policy changes beyond expectations; changes in international relations affecting the economic environment; overseas macro liquidity tightening beyond expectations; increased overseas volatility.

Summary from Zhongyuan Securities Research Report: “Market Analysis: Shipping and Semiconductors Lead Gains, A-shares Fluctuate and Consolidate”

Release Date: March 16, 2026

【Zhongyuan Lithium Batteries】

Monthly Report on Lithium Battery Industry: Short-term Sales Decline, Sector Continues to Focus

Investment Highlights:

In February, the lithium battery sector index outperformed the CSI 300 index. The lithium battery index rose by 6.21% in February 2026, while the new energy vehicle index increased by 4.41%. During the same period, the CSI 300 index rose by only 0.09%. The lithium battery sector showed stronger performance than the CSI 300.

In February, China’s new energy vehicle sales declined. In February 2026, sales reached 765,000 units, down 14.24% year-on-year and down 19.05% month-on-month. The monthly sales accounted for 42.38% of the annual total, mainly due to adjustments in purchase tax policies and weak consumer willingness during the Spring Festival holiday. In February 2026, China’s installed capacity of power batteries was 26.30 GWh, down 24.64% year-on-year, with ternary materials accounting for 21.67%. CATL, BYD, and CALB ranked top in installed capacity.

Upstream raw material prices fluctuated. As of March 13, 2026, battery-grade lithium carbonate was priced at 158,000 yuan/ton, up 5.33% from early February; lithium hydroxide was 153,300 yuan/ton, down 3.77%. Short-term price fluctuations are expected. Cobalt sulfate was 431,000 yuan/ton, down 1.93%; lithium cobalt oxide was 401,000 yuan/ton, down 0.74%; NCM523 cathode materials were 181,400 yuan/ton, stable; lithium iron phosphate was 56,200 yuan/ton, up 0.72%; lithium hexafluorophosphate was 110,000 yuan/ton, down 20.29%; electrolyte was 31,700 yuan/ton, down 9.43%. Overall, short-term prices face pressure, especially for lithium carbonate.

Maintain the “Outperform the Market” investment rating for the industry. As of March 13, 2026, the valuation of lithium batteries and the ChiNext are 29.21x and 45.27x, respectively. Considering industry prospects, the sector remains attractive. The February performance was driven by prior corrections, strong quarterly reports of some stocks, and market style shifts. The industry remains generally optimistic, with focus on upstream raw materials, monthly sales, policies, and solid-state battery developments. Short-term, monitor raw material prices, sales, policies, and technological progress. Long-term, the industry’s outlook remains positive, with growth potential in domestic and international new energy vehicle markets. Stock performance may diverge, so focus on leading companies in niche segments.

Risk Warning: Policy implementation weaker than expected; sharp raw material price fluctuations; lower-than-expected EV sales; increased industry competition; systemic risks.

Summary from Zhongyuan Securities Research Report: “Lithium Battery Industry Monthly Report: Short-term Sales Decline, Sector Continues to Focus”

Release Date: March 16, 2026

【Zhongyuan Chemicals】

Baofeng Energy (600989) Annual Report Review: Inner Mongolia Projects Achieve Full Production, Oil Price Rise Highlights Coal Chemical Advantages

Event: The company announced its 2025 annual report, with revenue of 48.038 billion yuan, up 45.64% year-on-year; net profit attributable to parent was 11.35 billion yuan, up 79.09%; net profit after non-recurring gains and losses was 11.52 billion yuan, up 69.91%.

Inner Mongolia olefin projects fully commissioned, boosting performance. As a leading enterprise in China’s new coal chemical industry, its main businesses include coal-based olefins and coking. Key products include polyethylene, polypropylene, and coke. In 2025, the 3 million-ton olefin projects in Inner Mongolia (phases 2 and 3) started production at the end of January and March, respectively, achieving full capacity. This significantly increased the company’s olefin output and sales. In 2025, polyethylene and polypropylene sales were 2.5346 million and 2.4605 million tons, up 123.31% and 111.20%. Coke sales were steady at 6.9259 million tons, down 2.26%. Prices declined due to falling oil prices and industry supply expansion: polyethylene, polypropylene, and coke averaged 76,473, 6,154, and 1,037 yuan/ton, down 8.69%, 8.10%, and 25.29%. Revenue from polyethylene and polypropylene was 16.406 and 15.142 billion yuan, up 103.88% and 94.10%. Coke revenue was 7.181 billion yuan, down 26.99%. Overall, revenue increased 45.64% driven by olefin growth.

Profitability improved as raw material prices fell. In 2025, prices for key raw materials—gasified coal, calcined coke, and thermal coal—fell 17.87%, 29.74%, and 18.96%. Gross margin increased slightly to 35.92%, up 2.77 percentage points; olefin gross margin was 38.16%, up 3.97 points; coking gross margin was 30.35%, up 1.17 points. Net profit margin was 23.63%, up 4.41 points. Net profit was 11.35 billion yuan, up 79.09%; after adjusting for non-recurring items, net profit was 11.52 billion yuan, up 69.91%.

Q4 saw further production and sales growth, but olefin prices declined, impacting results. In Q4, revenue was 12.493 billion yuan, up 43.46%; net profit was 2.4 billion yuan, up 33.29%. Production and sales of polyethylene and polypropylene in Q4 were 703,500 and 675,500 tons, up 3.73% and 1.26%. Falling olefin prices in Q4 caused quarterly revenue and profit to decline.

Rising oil prices are expected to improve profitability. In late February 2025, Middle East geopolitical tensions disrupted oil supply chains, causing international oil prices to surge since March. Downstream refineries reduced output, pushing up polyethylene and polypropylene prices—by 21.57% and 29.14% since March, reaching 8,192 and 8,517 yuan/ton. Meanwhile, coal prices remained stable. The widening oil-coal price gap enhances the profitability of coal-to-olefin routes, boosting company earnings.

The Nengdong Phase 4 project is progressing steadily, supporting future growth. The company’s projects have expanded steadily, providing a solid foundation for growth. With full operation of the Inner Mongolia olefin projects, capacity reached 5.2 million tons/year, ranking first in China’s coal-based olefin industry. The Nengdong Phase 4 olefin project started in April 2025, with civil works near completion and equipment installation underway, expected to start production by late 2026. The Xinjiang olefin project is also progressing. These projects will further increase production and sales, supporting long-term growth.

Profit forecast and investment rating: We estimate 2026 and 2027 EPS at 2.24 and 2.29 yuan. Based on the March 13 closing price of 34.70 yuan, PE ratios are 15.47x and 15.18x. Considering industry prospects and company position, we rate it as “Buy.”

Risk Warning: Demand below expectations; product prices decline; increased industry competition.

Summary from Zhongyuan Securities Research Report: “Baofeng Energy (600989) Annual Report Review: Inner Mongolia Projects Achieve Full Production, Oil Price Rise Highlights Coal Chemical Advantages”

Release Date: March 16, 2026