Analysis of the Sustainability of Fireworks Concept Speculation and the Investment Value of Huaratai

1. Event Background and Speculation Logic
   : In December 2025, Shanxi Province abolished the total ban on fireworks and shifted to scientific restriction [2], combined with the holiday catalyst of the approaching Spring Festival, triggering short-term speculation in fireworks concept stocks. Huaratai (001217.SZ) became a focus due to its nitric acid products being usable as fireworks colorants, and hit the daily limit on December 22 [2][0].
2. Market Trend Sustainability Assessment
   : In the short term (1-5 trading days), the probability of market divergence is high; in the medium term (1-3 months), it depends on the implementation of the “ban to restriction” policy in more provinces; in the long term (over 3 months), it needs verification of Spring Festival fireworks sales data to confirm demand growth [3]. Currently, only Shanxi Province has adjusted its policy; nationwide relaxation is still a market expectation and has not been officially confirmed [3].
3. Huaratai’s Fundamental Relevance
   : Huaratai does not directly produce fireworks, but its nitric acid production capacity ranks among the top in the industry, with nitric acid business accounting for about 15-20% of its revenue, and downstream customers include fireworks manufacturers [1][2]. If national demand grows by 10-20%, it will have a short-term elastic impact on the company’s performance, but due to the low proportion of the business, the overall fundamental drive is limited [3].

1. Industry Chain Transmission Path
   : The fireworks concept speculation shows a transmission characteristic from upstream raw materials (Huaratai, Kailong Co., Ltd.) to downstream production (ST Panda); upstream benefits first due to demand expectations, but the performance realization cycle is longer.
2. Linkage Between Sentiment and Policy
   : Short-term bullish sentiment (accounting for 60%) resonates with technical indicators such as MACD golden cross and strong RSI [3], but there are obvious medium-term divergences (30% of investors focus on policy follow-up, 10% warn of speculation risks), and institutions are generally cautious about long-term market trends [3].
3. Asymmetry Between Risks and Opportunities
   : The expected space for policy relaxation is limited, while the risk of policy not being implemented or sales falling short of expectations is more direct; investment opportunities belong to a typical event-driven theme and do not have long-term fundamental support.

1. Risk Points
   :
   • Policy uncertainty: If no more provinces relax restrictions later, the market trend may recede quickly [3];
   • Fundamental dependence: Huaratai’s fireworks raw material business accounts for a low proportion, with limited performance elasticity [1][2];
   • Market volatility: Thematic speculation is highly volatile; be alert to the risk of profit-taking [3].
2. Opportunity Window
   :
   • Short-term trading opportunities: Before policy expectations are realized, there may be room for short-term speculation;
   • Industry demand verification: If Spring Festival sales data exceed expectations, it may drive a second wave of market trends in the sector.

Based on the Shanxi fireworks policy adjustment event [2], combined with market data [0] and industry analysis [1][3], this analysis draws the following conclusions: - The fireworks concept market trend is mainly short-term thematic speculation, with long-term sustainability in doubt; - Huaratai benefits indirectly as an upstream raw material supplier, with limited performance impact; - Investment needs to focus on the pace of policy implementation and verification of sales data, and be alert to the risk of market volatility.