Zanyu Technology, as a leading domestic oil and chemical company with a capacity of 1.08 million tons per year, has a significant advantage at its Indonesia Dukuda base, which serves as the main source of the company's performance. Indonesia imposes high export tariffs on crude palm oil (CPO) but does not levy tariffs on refined processed products such as fatty acids. The Dukuda base purchases palm oil locally and exports refined processed products, gaining a clear tariff cost advantage. Indonesia's export tariff on CPO is an ad valorem tax; the higher the CPO price, the higher the tariff, and the more pronounced the base's tariff cost advantage, leading to higher per-ton profitability. The company's historical performance is positively correlated with CPO prices. The growth of Indonesia's palm oil plantation area is slowing, and aging trees are causing declining yields per unit area. Indonesia's and the global palm oil production are expected to remain stable in the future. Food consumption is the largest downstream sector, supported by population growth in India and Southeast Asia; chemical demand is rigid, and biodiesel demand continues to create new increments. With stable supply and growing demand, we are optimistic about the gradual upward trend in CPO prices, driving higher per-ton profitability at the Dukuda base. The company is promoting the Dukuda renovation and expansion project, leveraging some existing infrastructure with an investment of RMB 248 million. As of June 2025, some units of the project have entered the trial production phase. Once fully operational, it will contribute significant performance growth, driving the company into a new stage of development.
Zanyu Technology, as a leading domestic oil and chemical company with a capacity of 1.08 million tons per year, has a significant advantage at its Indonesia Dukuda base, which serves as the main source of the company's performance. Indonesia imposes high export tariffs on crude palm oil (CPO) but does not levy tariffs on refined processed products such as fatty acids. The Dukuda base purchases palm oil locally and exports refined processed products, gaining a clear tariff cost advantage. Indonesia's export tariff on CPO is an ad valorem tax; the higher the CPO price, the higher the tariff, and the more pronounced the base's tariff cost advantage, leading to higher per-ton profitability. The company's historical performance is positively correlated with CPO prices. The growth of Indonesia's palm oil plantation area is slowing, and aging trees are causing declining yields per unit area. Indonesia's and the global palm oil production are expected to remain stable in the future. Food consumption is the largest downstream sector, supported by population growth in India and Southeast Asia; chemical demand is rigid, and biodiesel demand continues to create new increments. With stable supply and growing demand, we are optimistic about the gradual upward trend in CPO prices, driving higher per-ton profitability at the Dukuda base. The company is promoting the Dukuda renovation and expansion project, leveraging some existing infrastructure with an investment of RMB 248 million. As of June 2025, some units of the project have entered the trial production phase. Once fully operational, it will contribute significant performance growth, driving the company into a new stage of development.