Tensions between the U.S. and Iran have escalated once more, causing persistent disruptions in the Strait of Hormuz and impacting price dynamics in the chemical sector. As a global leader in the integrated coking chemical industry, CHINA RISUN GP (01907) has drawn significant market attention. In reality, the coke industry is experiencing a cyclical downturn, with a continuous pullback since April this year. Most related stocks have seen substantial declines, pushing CHINA RISUN GP's valuation into a "golden pit," with its PB ratio at just 0.6 times.

Cyclical industry fluctuations are essentially performance cycles, and performance is highly sensitive to prices. For instance, in the lithium battery sector, after bottoming out in the first half of last year, prices steadily recovered in the second half, leading to a dual boost in performance and valuation, with most stocks doubling in market value. According to information from Zhitong Finance, during this valuation pullback cycle, CHINA RISUN GP has boosted market confidence through "buybacks and dividends." The company establishes a buyback plan annually. Since June of this year, it has conducted 14 buyback sessions, repurchasing 25.438 million shares for a total of 534.036 million Hong Kong dollars. Concurrently, the company is accelerating its new energy business, establishing a strategic direction with coke and chemicals as its core foundation and new energy as a new growth engine.

Price Turning Points Reshape Fundamentals, with Three Industry Pillars Providing Certainty

Cyclical industries are highly sensitive to price, which often determines their performance and valuation direction. For CHINA RISUN GP, price inflection points are reshaping its fundamentals. Firstly, the company has a solid foundation, starting from coke and building three distinct chemical industry chains: carbon materials, alcohol-ammonia, and aromatics. Additionally, Risun Holdings strategically invested in Binhai Energy in 2022, entering the new energy lithium battery anode sector. In April 2026, it increased its stake in Binhai Energy by 14.5% through equity transfer, further strengthening its position in this industry.

The company holds a scale advantage across all three industries. As of 2025, CHINA RISUN GP operates 19 coke production lines with an annual capacity of 23.7 million tons and 56 chemical production lines with an annual capacity of 6.2 million tons. In these two major sectors, it holds a leading market share in products including coke, coking crude benzene, caprolactam, and high-purity hydrogen. Meanwhile, Binhai Energy, in coordination with Risun Holdings, has a production capacity of 100,000 tons of integrated artificial graphite anode materials and is fully constructing a 200,000-ton integrated anode material project, scheduled for full completion by December 2026, with shipments expected to reach 130,000 tons this year.

Looking first at the coke business, it is one of CHINA RISUN GP's core segments, contributing over 30% of revenue and demonstrating resilient performance. From 2022 to 2025, the coke industry underwent a cyclical adjustment period, with prices hitting bottom and the sector experiencing a dual decline in volume and price. However, leveraging its leading position, the company achieved double-digit compound growth in sales volume, continuously increasing its market share. At the same time, through cost control, its gross profit per ton of coke remains at an industry-leading level. The coke and coking business maintained profitability in 2025. Although revenue was affected by prices, business gross profit grew by 10.4%, with the gross margin improving to 12.4%. This is attributed not only to scale advantages but also to the company's unique coal blending technology in production and advantages across supply, transportation, and sales, creating room for profitability. Nevertheless, the industry's trough has passed. Coke prices have risen for four consecutive quarters since the second half of last year, and the logic of energy substitution still provides upward momentum. The recovery in industry "volume and price" brings growth expectations for this business. With a high proportion of self-owned capacity, the company has significant performance elasticity. Among its operational capacity, the company's annual certified production capacity for self-owned coke is 17.4 million tons, accounting for 73%. Its operational parks are located in Dingzhou and Xingtai (Hebei), Yuncheng (Shandong), Hohhot (Inner Mongolia), Pingxiang (Jiangxi), and Indonesia, where there is also 1.6 million tons of capacity under construction. The sales rate has consistently exceeded 90%.

Next is the chemical business, which is CHINA RISUN GP's primary revenue source, contributing over 40% of income. Starting from coking, this business has formed three pathways: carbon materials, alcohol-ammonia, and aromatics. The company has 5.42 million tons of self-owned chemical capacity, representing 87.42% of its total. Its self-built projects are distributed in parks across Xingtai, Dingzhou, Cangzhou, Leting, Yuncheng, Dongming, and Hohhot. In the carbon materials chain, it has production capacity for approximately 1 million tons of coal tar, 500,000 tons of coal tar pitch, 180,000 tons of phthalic anhydride from industrial naphthalene, and 150,000 tons of carbon black. The alcohol-ammonia chain has capacity for 600,000 tons of methanol, 900,000 tons of synthetic ammonia, and 5,000 tons of amino alcohols. The aromatics chain has capacity for 860,000 tons of crude benzene hydrogenation, 300,000 tons of styrene, and 810,000 tons of caprolactam. Chemical product prices are linked to coke prices, but since the U.S.-Iran conflict, supply and demand have been continuously disrupted, leading to significant price volatility. For example, in Q1 2026, methanol prices rose over 45%, fell 26% in Q2, but then rose over 10% again in Q3 as the conflict escalated. Similarly, pure benzene followed a similar trend to methanol but with greater elasticity, rising over 60% in Q1, falling in Q2, and then rising nearly 20% in Q3. The company's chemical business has high certainty of performance growth in 2026, which is expected to drive a recovery in overall performance. Three main factors contribute to this incremental performance: first, the price increase of products like methanol and hexamethylenediamine; second, scale expansion, such as the commissioning of a self-developed 50,000-ton capacity hexamethylenediamine production line from caprolactam in the first half of 2026; and third, as the second-largest national producer and the largest in the Beijing-Tianjin-Hebei region for high-purity hydrogen, its five production lines with a total capacity of 34 tons/day will release performance. Additionally, the company provides operational management services and procurement trading for third-party independent coke and chemical product producers, solidifying its leading position and competitive advantages. In 2025, it provided operational management services to six coke producers and two fine chemical product producers. However, the revenue contribution from operations management and trading is relatively low, with less price elasticity, and does not significantly impact the overall business.

Finally, the new energy industry is the company's third major pillar. Since its strategic investment in Binhai Energy, CHINA RISUN GP has entered the lithium battery anode material sector, investing substantial resources in a 300,000-ton integrated anode material project in Shangdu County, Ulanqab City, Inner Mongolia. This project is paired with a scarce 580MW source-grid-load-storage green electricity project. The anode project is expected to reach full capacity by the end of this year, and the green electricity project is also expected to be fully operational by November, contributing to the company's performance. With deterministic drivers across the coke, chemical, and new energy pillars, CHINA RISUN GP has clearly reached an inflection point in its performance. However, for investors, beyond the fundamentals, a key highlight lies in the company's generous returns to shareholders.

Adhering to a Long-Term Strategy, Comprehensively Enhancing Shareholder Returns

Evaluating whether a company is good involves assessing its commitment to a long-term development strategy. A sustainable business is one that is responsible to its shareholders. CHINA RISUN GP uses dividends and buybacks to boost market confidence during cyclical adjustments and continuously enhance shareholder returns. The company has always placed great importance on shareholder returns, distributing dividends every year, even during industry adjustment cycles when revenue and profits were affected, maintaining a high payout ratio. According to financial reports, from 2023 to 2025, the company distributed dividends (including final and interim) of 257 million yuan, 87 million yuan, and 103 million yuan respectively, representing over 50% of total net profit. In 2024 and 2025, dividends paid accounted for 435% and 224% of that year's net profit, respectively. The company's annual shareholders' meeting approves a 10% share buyback authorization, and it diligently implements this policy. From 2023 to 2025, it repurchased shares worth 41 million HKD, 354 million HKD, and 199 million HKD, respectively. As of now, it has repurchased 53 million HKD in 2026. The total amount spent on buybacks and dividends exceeds 1 billion yuan, far exceeding total net profit. The confidence for such high dividends and buybacks stems from the company's consistent positive operating cash flow, which was 1.436 billion yuan in 2024 and 3.465 billion yuan in 2025, supporting business expansion and shareholder returns. With solid fundamentals, deterministic drivers from its three industry pillars, and generous dividend and buyback policies, the company has gained favor from major investment banks. For instance, a research report from Changjiang Securities believes that the company's coke foundation is stable, with unique cost advantages providing strong profit resilience. The coal chemical sector is facing improved profitability opportunities, and leveraging its cost advantages from the industry chain, it is well-positioned to benefit. Short-term profit expansion in coal chemicals, combined with mid-term strategic drivers from energy security, could support valuation increases. In summary, CHINA RISUN GP's fundamentals have reached an inflection point. The coke industry is gradually recovering its cycle, with energy substitution prices rising quarter by quarter. Although the chemical sector faces short-term volatility due to the U.S.-Iran conflict, overall prices are significantly higher than last year, providing high certainty for business growth and profitability. The new energy business, reaching full capacity by year-end, is expected to contribute to performance next year. The company's focus on shareholder returns through generous dividends and buybacks continues to enhance shareholder value. The company's stock price recently bottomed out and rebounded. Over the past five trading days, Shanghai-Shenzhen-Hong Kong Stock Connect funds recorded net purchases of 8.034 million shares, suggesting large capital is quietly positioning. This fundamental inflection point may drive the valuation into an upward cycle, offering a high reward-to-risk ratio.