Key investment points: The company plans to invest in 150,000 tons of differentiated nylon filament projects, which are currently in the early stages of negotiations. The company announced in the evening that it plans to invest 1,824 billion yuan in a two-year differentiated nylon filament project with an output of 150,000 tons. The project construction cycle is 2 years, and the expected payback period is 5-6 years. The construction of the project is expected to add 430 mu of land. Currently, the company is still in negotiations with the Buyiwu Municipal People's Government on the relevant arrangements for the project, and no land use contract has yet been signed. Currently, the project is in the second negotiation stage, and the municipal government is very supportive of the construction of the project. The amount invested in the unit production capacity of the project to be invested is less than the amount invested in the unit production capacity in the past, but the increase in land use area indicates an increase in the value of the project. Comparing our company's past investment projects, we found that the company's current plan shows a scale effect, which is reflected in the reduction in the investment amount per ton of production capacity and the increase in land use area (considering land value-added factors, we believe this is a hidden asset). The tonnage investment amount of the company plans to invest in the project is 12,160 yuan/ton, and the land demand is 1.91 square meters/ton. The tonnage investment for the company's 50,000-ton differentiated nylon filament project is 1,590 yuan/ton, and the land demand is 1.68 square meters/ton. The tonnage investment amount for the 40,000-ton differentiated nylon filament project in the company's fund-raising project is 20,000 yuan/ton, the demand for land is 5.76 square meters/ton, the tonne investment for 20,000 tons of differentiated DTY nylon filament is 15,650 yuan/ton, and the demand for land is 1.65 square meters/ton. Judging from the data above, the tonne investment amount of the company plans to invest in this project is the smallest amount, and the corresponding land use area per ton is the largest value since the past 2 years (the 40,000-ton project was put into operation in 2011, so comparability is poor). If the project can finally be put into operation, the company's production capacity will triple and become an industry giant, and it may fully control pricing power in the middle and high-end sectors in the future. The company currently has an annual production capacity of 82,000 tons of nylon filament, and is under construction with a production capacity of 70,000 tons of nylon filament and a production capacity of 8 tons of nylon chips. If the project is successfully negotiated and put into production, the company's nylon filament production capacity will reach 302,000 tons, almost three times the current production capacity. From an investment point of view, if the valuation level and profitability of the company after the final commencement of production are not at the same level, then the company can be declared three times as many shares. From the perspective of the competitive pattern of the industry, according to our statistics, the current domestic production capacity of PA6 nylon filament is about 600,000 tons (not the entire nylon industry; PA6 is just a type of nylon; the company's product is PA6 nylon civilian filament; usually we refer to the company's product as nylon filament for short), and the annual growth rate of production capacity is about 10%. If the company completes the investment of all production capacity in 2015, its production capacity will account for about 40% to 50% of the industry, becoming a well-deserved giant of the industry (there is no doubt that production capacity ranks first). The products of the second company are positioned in the middle and high-end fields of PA6 nylon filament, mainly used in high-grade pantyhose, jacket linings, etc. (because PA6 has good moisture absorption capacity and excellent skin comfort). Currently, it already has strong pricing ability, and the price of its products is several thousand yuan/ton higher than that of ordinary nylon filament. We expect that after the company's production capacity is fully released, it may fully seize pricing power in the middle and high-end sectors in the future. The media's analysis of the nylon industry is wrong. We have taken note of the relevant November 12 report by DaZhi Asdaq News Agency. Among them, some analysts cited the poor performance of nylon companies and used the year-on-year performance of the three listed nylon companies in the first three quarters of this year as evidence for their arguments. There are the following fatal problems in our reasoning process: (1) The products of the three companies are very different. Shenma shares are mainly PA66 wire, not PA6 wire. Huading Nylon and Meida shares have PA6 wire, but there are also differences in the industrial chain and product structure of those involved. Meida shares are mainly sliced, taking into account both filament and printing and dyeing cloth. Currently, Huading Nylon still mainly uses filament; (2) Performance depends on net profit rather than revenue. Reports ignore the impact of product price factors on revenue, but do not analyze profitability. In 2013, the average price of nylon products declined, and during this period, Huading Nylon and Meida Co., Ltd. did not release new production capacity, which led to a year-on-year decline in operating income, but the 53% year-on-year increase in net profit of Huading Nylon was avoided; (3) The production capacity of Meida Co., Ltd.'s filament production capacity was not 200,000 tons. In the simplest comparison, Meida's revenue in filament was lower than Huading Nylon. Currently, Huading Nylon's production capacity is only 82,000 tons. The profitability of the nylon industry continues to improve, and the financial situation is good. As of the disclosure data of this year's interim report, we can see that the profitability of the company's four types of nylon filament has begun to increase continuously, and some products have returned to the profit level of 2011. Judging from the operating capacity, the number of days of inventory turnover has reached 56 days, and the number of days of turnover of accounts receivable is 39 days. According to our tracking understanding of the company, the current operating capacity is at the best level in the past three years. Raise target prices and maintain an investment rating of “increased holdings.” According to the estimate that the project construction schedule will not be put into operation in the company's interim report this year, we assume that the 50,000-ton nylon filament project will be fully put into operation in June next year and the 20,000 ton nylon filament project will be fully put into operation in May next year, then in terms of production capacity, the company will increase by 43% year on year next year and 30% year-on-year in the following year. We will not consider the 150,000-ton nylon filament project in the profit forecast results for the time being. We expect the company's 2013-2015 EPS to be 0.14 yuan, 0.28 yuan, and 0.44 yuan. Giving the company a valuation level of 20 times that of 2014, the target price was raised to 5.6 yuan. Risk warning. The risk of project negotiations failing; the risk of another downturn in the industry's business cycle.