First Shanghai has released a research report maintaining a "buy" rating on Dongyue Group (00189), forecasting the company's revenue for 2025-2027 at RMB 16.09 billion/17.47 billion/18.15 billion respectively, with net profit of RMB 1.90 billion/2.58 billion/2.81 billion. The firm assigns a 15x PE ratio for 2025, setting a target price of HK$18.9, representing a 57.5% upside from current levels.

First Shanghai's key viewpoints are as follows:

**First-Half Profit Exceeds Expectations**

The company achieved revenue of RMB 7.46 billion in the first half of 2025, up 2.8% year-on-year. Gross margin reached 29.1%, improving by nearly 9.3 percentage points year-on-year. Net profit attributable to shareholders was RMB 780 million, up 153.3% year-on-year, slightly above the company's profit alert guidance.

**Refrigerant Business Maintains High Momentum with Continuous Price Increases**

The group's refrigerant business experienced rapid growth, becoming an important pillar of the company's performance. First-half revenue reached RMB 2.29 billion, up 47.7% year-on-year. Profit was RMB 1.03 billion, up 209.8% year-on-year, with segment profit margin at 44.9%, improving by 23.5 percentage points year-on-year, mainly benefiting from significant price increases in major products including R32, R22, and R410a.

Currently, as of September 12, the price of second-generation refrigerant R22 is RMB 34,500 per ton, up RMB 2,500 per ton from the beginning of the year. For third-generation refrigerants, R134a is priced at RMB 52,000 per ton, up RMB 500 per ton from early September; R32 is priced at RMB 61,500 per ton, up RMB 1,500 per ton from early September and over RMB 18,000 per ton from the beginning of the year. With continued implementation of refrigerant quota reduction policies, supply-side constraints persist while demand from air conditioning and automotive sectors remains robust. The firm expects refrigerants to continue maintaining high momentum.

**Fluorinated Polymers and Organosilicon Still Under Pressure**

Downstream demand for fluorinated polymer materials remains weak, with product prices declining further compared to last year. Nevertheless, the company maintains prominent competitive advantages in this field: product quality exceeds industry average standards, and prices are higher than similar market products. During market downturns, performance maintains strong resilience. First-half revenue was RMB 1.94 billion, down 4.6% year-on-year; segment profit was RMB 260 million, with segment profit margin at 13.4% (compared to 14.9% in the same period last year). The firm expects this segment's performance to achieve good recovery as industry capacity expansion gradually concludes, combined with emerging industrial chains driving demand for fluorinated polymer products.

For organosilicon, affected by multiple factors including concentrated release of new capacity, weak downstream terminal demand, and international trade environment, market supply and demand are severely imbalanced, leading to product price declines and reduced external sales revenue and performance for this segment. First-half revenue was RMB 2.76 billion, down 15.9% year-on-year; segment profit was RMB 8.75 million, down 83.7% year-on-year, with segment profit margin at 0.38% (compared to 1.95% in the same period last year).