Juhua: The company's refrigerant products are not affected by the current "equivalent tariffs" between China and the United States

Recently, Juhua made the following response to the tariff issue raised by investors:
1. What is the impact of the "34% equivalent tariff" imposed by China and the United States on the company's refrigerant business?
Juhua Corporation: R134a and some mixed refrigerants, HFOs are included in the US tariff exemption list and will be subject to the original tariff rate; This time, the United States has imposed a 10% benchmark tax rate on the United Arab Emirates, which has a certain tariff advantage compared to major producing countries such as India entering the US market and is beneficial for our subsidiary in the UAE; At present, the United States has imposed anti-dumping and countervailing tariffs (200%+)+20% on the export of R134a, R125, R32 and their mixtures to China. In 2024, our company's domestic export of refrigerants (all HFOs) to the United States accounted for less than 2% of our company's revenue; Currently, the United States is promoting the replacement of R410A (50% R32+50% R125 blend) with R454B (68.9% R32+31.1% R1234y blend). Compared to R410A's "anti-dumping and countervailing tariffs (200%+)+20% tariffs" and R454B's "20% tariffs", the actual export tariffs for R32 to the United States have significantly decreased;
Currently, in the global competitive landscape, China accounts for over 80% of the supply, while China, India, and the United Arab Emirates together account for over 90%. The top five Chinese companies account for about 90% of China's supply, and the competitive landscape is highly concentrated, especially for third-generation refrigerants, where these top Chinese companies have high pricing power; The downstream air conditioning equipment for automobiles, household air conditioners, and industrial, commercial, and agricultural sectors of refrigerants have the attributes of essential needs and consumer goods. As a functional agent of downstream air conditioning equipment (with a low cost proportion), refrigerants maintain a growing trend in the demand for main units and the increasing demand for after-sales maintenance of air conditioning equipment, and have high price elasticity; At present, China's policy of "updating equipment and exchanging old for new" is being deeply promoted, and it is not ruled out that further efforts will be made to stimulate the consumption of automobiles and air conditioners, driving the consumption of refrigerants. In addition, the global South is a growth area for air conditioners (necessary for improving living standards) and has huge potential space.
Therefore, it is expected that there is still good growth potential for refrigerants and their downstream; At present, China has implemented a production quota system for second-generation and third-generation fluorine refrigerants, and some products are in short supply. The addition of "equivalent tariffs" by China and the United States this time will not change the competition pattern, supply and demand pattern, and price upward trend of fluorine refrigerants, nor will it change our company's refrigerant export pricing policy based on the factory price. In summary, our company's refrigerant products are not affected by the current "equivalent tariffs" between China and the United States, and the trend of profit growth is currently expected to remain unchanged.

2. What is the impact of the "34% equivalent tariff" imposed by China and the United States on the company's non refrigerant business?
Juhua Corporation: Considering that the company's fluorine chemical raw materials are mainly for personal use and are less affected by external factors; Traditional basic chemical industry has a certain regional sales radius; Petrochemical products are highly sensitive to oil prices. But in recent years, the cumulative decline in product prices has reduced profits by more than 4 billion yuan, and the risk release is relatively sufficient. And due to the significant growth in the company's refrigerant performance, the proportion of non fluorine refrigerant business in the company's profit structure is small. Therefore, it is expected that this tariff will not change the upward trend of the company's annual performance.