Event: the company released its report for the three quarters of 2023. In the first three quarters of 2023, the company realized operating income of 2.91 billion yuan, year-on-year + 3.83%, net profit of 278 million yuan,-8.65%, and non-return net profit of 236 million yuan, 12.21% of the same period last year. Among them, 23Q3 achieved operating income of 969 million yuan, with a month-on-month ratio of + 13.87% to 4.33%, a net profit of 63 million yuan, a net profit of + 372.66%, a net profit of 20.17%, a non-return net profit of 45 million yuan, and a month-on-month ratio of + 500.52% and 34.40%, respectively. The company's performance is basically in line with market expectations.
Spandex industry is expected to build a bottom, aramid development prospects are broad. According to the statistics of China Fiber Network, the average price of 23Q3 domestic spandex 40D is 31700 yuan, which is-5.59% last year and-1.53% quarter-on-quarter. At present, spandex price is in the bottom range, and the month-on-month decline has narrowed. It is expected that with the gradual rebound of downstream demand in the future, the prosperity of the spandex industry is expected to improve. In terms of meta-aramid, the company began to increase its share by taking the initiative to reduce prices in the first half of the year. Affected by product prices, the company's short-term profit level is under pressure. 23Q3's sales gross profit margin is 20.78%, month-on-month ratio is + 5.56/-4.39pcts, net sales profit rate is 7.67%, month-on-month ratio is + 6.24/-2.05pcts, respectively. In addition, the company continues to promote the construction of new production capacity of intermediate aramid, and is expected to form a capacity layout of 16000 tons of intermediate aramid and 16000 tons of para-aramid by the end of 23rd, and the production and marketing of aramid is expected to accelerate with the landing of the new production capacity.
The green printing and dyeing project has been put into production, and a number of innovative businesses have been steadily advanced. The company's green printing and dyeing project has been put into production and is carrying out trial order proofing; aramid diaphragm verification has been steadily advanced, and small batch orders have been obtained; the production line of high-performance intermediate aramid and its derivative products with an annual production capacity of 20,000 tons is also in progress. Aramid paper composite project has been ordered by the head customer, and it is expected that each business will contribute significantly to the increase in the company next year.
Investment suggestion: we expect the company to achieve a net profit of RMB 387,000,000 in 23-25, which is-11.1%, 60.3%, and 40.4%, respectively, compared with the same period last year, corresponding to an EPS of 0.45, 0.72, and 1.01 yuan, maintaining the "buy" rating.
Risk hints: spandex demand improvement is not as expected; aramid capacity construction is not as expected; industry competition is intensified.