On October 19, 2009, the Ministry of Commerce issued notice No. 80 of 2009, "preliminary decision on Anti-dumping investigation of Nylon 6 chips originating in the United States, the European Union and other countries and regions". The preliminary ruling found that there was dumping in the imported nylon 6 slices originating in the United States, the European Union, Russia and Taiwan, the Chinese mainland nylon 6 chip industry suffered substantial damage, and there was a causal relationship between dumping and material damage. It was decided to charge a deposit of 4% and 36.2% for the import of nylon 6 chips from the United States, Europe and other places.

Comments: 1. Overview of nylon 6 slices. Nylon 6 slices, scientific name polycaprolactam, also known as polyamide-6 slices or nylon 6 slices. Nylon 6 chip is a widely used synthetic resin because of its good coloring, toughness, wear resistance, self-lubricity, low temperature resistance, bacteria resistance, good molding processability and so on. Nylon 6 chips are mainly used in the production of chemical fiber, engineering plastics, plastic film and composite materials, and its downstream is mainly in the fields of chemical fiber, textile, chemical industry, electronics, machinery, automobile, military industry, food and medical treatment.

2. The import dependence of nylon chips is gradually increasing, and the industry calls for an anti-dumping ruling. In 2005, the apparent consumption of nylon 6 slices in China was 918900 tons, the import volume was 220900 tons, and the import dependence degree was 24.04%. In 2008, the apparent consumption of nylon 6 chips was 1.3002 million tons, the import volume was 551200 tons, and the import dependence degree was 42.39%. In just four years, import dependence increased by 18.36 percentage points. The increase of import dependence will bring harm to the development of domestic enterprises and make the development of domestic enterprises more difficult. Therefore, there is an urgent need to impose sanctions on anti-dumping of nylon 6 slices in the United States, the European Union and other places.

3. Anti-dumping of adipic acid and nylon 66 slices has been introduced one after another, and the anti-dumping of nylon 6 slices is inevitable. According to the nylon industry chain, nylon chips are divided into two kinds, namely nylon 66 slices and nylon 6 slices, in which the raw materials of nylon 66 slices are adipic acid and the raw materials of nylon 6 slices are caprolactam. Nylon 66 slices, nylon 6 slices and their raw materials are highly dependent on imports. Among them, the import dependence of adipic acid and nylon 66 slices is about 40%, while that of caprolactam is as high as 60%. On June 26 and October 12, 2009, the Ministry of Commerce made anti-dumping rulings on adipic acid and nylon 66 slices respectively, and certain anti-dumping duties will be levied on imported products. On April 29, 2009, the Ministry of Commerce launched an anti-dumping investigation on imported nylon 6 slices, which lasted 6 months, which was 5 months shorter than that of nylon 66 slices from filing to adjudication, indicating that anti-dumping sanctions against nylon 6 slices are imperative.

4. The export of textile and clothing warms up quickly. Judging from the export of textile and clothing downstream of nylon fiber, the export growth rate in the first nine months of this year was 11.17% lower than that of the same period last year, although it was still in a negative growth. however, the export data in September brought some warmth to the coming autumn. The export growth rate in September was-6.94%, an increase of 8.64 percentage points from the previous month, and we are looking forward to the positive monthly growth in the fourth quarter. From the perspective of domestic demand, the month-on-month improvement in the first eight months has gradually improved. In the first eight months of this year, retail sales of textiles and clothing increased by 16.70% compared with the same period last year. Since May, the growth rate of retail sales of textiles and clothing has been maintained at about 20% year-on-year, indicating that domestic demand is relatively strong.

5. The preliminary decision of the anti-dumping investigation of nylon 6 slices is good for Meida shares. Meida shares is the leading enterprise in the nylon 6 chip industry, and it is also the only nylon 6 chip listed company. Due to the great impact of foreign imports, the company's performance has not been very satisfactory. We think that the collection of margin for nylon 6 chips will bring benefit to Meida shares.

We estimate that the earnings per share of Meida shares from 2009 to 2010 will be 0.10 yuan and 0.26 yuan respectively, and the corresponding dynamic price-to-earnings ratio will be 51 times and 20 times respectively according to the closing price of 5.12 yuan on October 19th. Considering that the margin imposed on imported nylon 6 chips is expected to increase the price of nylon 6 chips and enhance the company's profitability, we upgrade the company's investment rating to "overweight". Remind investors to pay attention to the trading opportunities brought about by the preliminary decision of anti-dumping.