Tianfeng Securities: The pattern or improvement of the wind power equipment and agrochemical products industry driven by a substantial reversal

The Zhitong Finance App learned that Tianfeng Securities released a research report saying that the logic of this round of anti-internal circulation is different from supply-side reforms. This round of anti-internal circulation focuses more on cost investigation and price monitoring to control disorderly competition among enterprises at low prices. After an interpretation at the expected stage of speculation, the anti-domestic market will later evolve into pricing which industry cycles are cleared, and performance can be stabilized and continuously verified. The market will shift from “expected reverse internal volume” (reversal of game dilemmas) to “actual reverse internal volume” (actual price improvement). Agrochemicals, wind power equipment, or examples of “substantial anti-internal volumes.”

There are two industries with a pattern or improvement. One is wind power equipment, and the other is agrochemicals:

From the state of the wind power equipment pattern, it can be seen that:

1) In terms of operating cash flow and capital expenditure: In 2023-2024, the share of companies with a year-on-year decline in CAPEX (TTM) in the industry increased further, cash flow improved, and the share of companies with operating cash flow (TTM) less than 0 in the industry declined, and the corresponding clearance was basically in place. Since 2025Q1, there has been another upward trend in industry capital expenditure. The share of companies with a year-on-year decline in CAPEX (TTM) has declined, and the right side of the clean-up has already appeared.

2) In terms of gross margin and total capital expenditure: From 2022 to 2023, the industry's CAPEX (TTM) growth rate declined to a negative number, and the proportion of companies with a month-on-month decline in gross profit margin (TTM) remained high, corresponding to the deepening of the clean-up. “Start making steady money.” 2023-2025Q1, the profitability of the industry improved, and the share of companies with a month-on-month decline in gross profit margin (TTM) in the industry declined, and the corresponding clearance was basically in place.

3) Inventory and revenue: Since 2025Q1, industry revenue (TTM) has maintained a positive year-on-year increase, and inventory has been removed.

From the state of the agrochemical (pesticide & fertilizer) industry, it can be seen that:

1) The background of the high point in the previous cycle was that the agrochemical market actively accumulated stocks in '21, and prices were high. The gross profit situation increased during this period, and pesticide companies' revenue increased dramatically.

2) The industry continued to accumulate inventory in 22H2-23. After 22H2, the industry supply and demand pattern reached an inflection point, and supply exceeded demand; Q3 of 23-24 was in the inventory clearance stage.

3) The cycle reversal logic that can be reflected in continuous financial reports is quarterly level logic, and needs to be distinguished from the cyclical level logic expected only during the speculation phase in reverse internal volumes.

The four-quadrant chart of the industry pattern may seem complicated, but in reality it is just a traditional arrangement and combination of indicators such as capital expenditure (production capacity), gross profit (supply and demand), and inventory.

As far as methodology is concerned, the indicators that need to be focused on are not the same for different types of cyclical industries. Tianfeng Securities believes that the supply-side pattern of volume-type cyclical stocks depends more on CAPEX and the clearance of corporate production capacity. However, when price cycle stocks are selected, “inventory removal determines the small-level market, and the enterprise's production capacity clearance+demand side determines the large-scale market”, while the inventory cycle is often shorter than the capital expenditure cycle, and inventory volatility is also greater. At this stage, subsequent key industry verification indicators or prices. The spontaneous rise in product prices is a condition for further market development.