Thirty years of deep ploughing leads the domestic polypropylene filament track. The company takes the research and development of differential polypropylene filament as the core, on the one hand, it continues to improve product quality and downstream application space. After 30 years of development, the company's products have been widely used in industrial and civil fields. According to the statistics of China Chemical Fiber Industry Association, the company ranks first in the market share of domestic polypropylene filament industry in the past five years.

Polypropylene: the widening price gap is expected to bring profit improvement, new capacity to strengthen the lead. The main results are as follows: (1) the main raw material of polypropylene filament is polypropylene, which is mainly used in industrial fields such as industrial filter cloth, engineering geotextile, automobile and civil fields such as box and bag ribbon, water pipe cover, door and window sliver, clothing and so on. In 2022, due to the high price fluctuation of crude oil, the price of polypropylene rose sharply, and the profit pressure of polypropylene industry was prominent. With the recovery of downstream demand and the relief of cost pressure of raw material polypropylene, the profit of polypropylene filament industry is expected to hit bottom and pick up. (2) the leading advantage of new capacity enhancement: by the end of 2022, the company has a polypropylene filament production capacity of 32000 tons, and the capacity scale advantage will be further strengthened after 38000 tons of polypropylene filament capacity is put into production. At the same time, the new project will help the company to complete the multi-product and multi-process layout of FDY, DTY and BCF, reduce polypropylene unit consumption, and optimize production efficiency and product layout.

Carbon fiber: take advantage of the home-made alternative to the east wind, dual-base to explore new growth points. The main results are as follows: (1) carbon fiber has excellent properties and is widely used in aerospace, energy and other fields. From the supply side, the proportion of domestic carbon fiber increased from 18.40% in 2016 to 60.46% in 2022. The actual supply in China in 2022 was 45000 tons, and the sales volume of domestic carbon fiber exceeded the imported quantity for the first time. However, there is still a large alternative space for high value-added products. From the demand side, domestic demand for hydrogen and other new energy industries is expected to remain high. The demand in the aerospace and aviation field is expected to achieve rapid growth driven by the mass production of large domestic aircraft, and there is a bright future for the domestic replacement of carbon fiber. (2) the company has ploughed the polypropylene industry for 30 years, and the output and market share of polypropylene filament have ranked first in China in the past five years. In cooperation with domestic Haifeng leading electric and wind power, the company has entered the carbon fiber industry in parallel. According to the company announcement, Guangdong and Gansu carbon fiber dual bases have a total production capacity of 83900 tons of carbon fiber and 21000 tons of carbon fiber, which will help the company to explore new growth points.

Adjust the profit forecast and maintain the "overweight" rating: based on the differentiation strategy, the release of new production capacity will strengthen the company's leading position in the polypropylene filament industry. in addition, the company will cooperate with domestic sea breeze leading enterprises to distribute carbon fiber. it is expected to open new performance growth points, and we adjust our profit forecast. It is estimated that the company's net profit from 2023 to 2025 will be 0.62,1.17 and 184 million yuan respectively (originally 0.60,1.38 and 219 million yuan), corresponding to 38X, 20x and 13x respectively, maintaining the "overweight" rating.

Risk hint: the release of new capacity is not as expected; the risk of demand decline.