Dongyue Group (HKEX: 00189) shares surged more than 10% during the morning session. At the time of writing, the stock was up 10.47%, trading at HK$17.52 with a turnover of HK$560 million.

The proposed 2027 refrigerant quota policy has been issued. The domestic refrigerant quota plan for 2027 is largely consistent with that for 2026. Notably, HFC-245fa is prohibited from being converted to other varieties, while the upper limit for the conversion ratio of other varieties switching to HFC-245fa has been raised to 50%. Benefiting from the quota-based production system and the ongoing improvement in market supply-demand dynamics, the average price of refrigerants is expected to see a restorative increase.

An earlier research report from China Securities (CSC) noted that Dongyue Group is a leader in second and third-generation refrigerants, holding a high market share in core products like R22 and R32 and possessing industry-wide joint pricing power. From a long-term perspective, third-generation refrigerants still have significant room for price increases, and the company is poised to benefit substantially. The report indicated that the substantial profits from the refrigerant segment are expected to provide continuous funding for the research and development of high-end fluorine-based materials.