Events:
On October 28,2023, Taihe Xincai released the third quarterly report of 2023: in the first three quarters of 2023, the company realized operating income of RMB 2.91 billion yuan, with a year-on-year increase of 3.83%; realized net profit attributable to shareholders of listed companies of RMB 278 million yuan, with a year-on-year decrease of 8.65%; weighted average return on net assets was 4.16%, with a year-on-year decrease of 3.54 percentage points. Gross profit margin of sales was 24.85%, an increase of 2.66 percentage points year-on-year; net profit margin of sales was 11.17%, a decrease of 1.15 percentage points year-on-year.
Among them, Q3 in 2023 realized revenue of RMB 969 million yuan, year-on-year +13.87%, month-on-month +4.31%; net profit attributable to parent was RMB 63 million yuan, year-on-year +372.66%, month-on-month-20.25%;ROE was 0.91%, with a year-on-year increase of 0.57 percentage points and a month-on-month decrease of 0.21 percentage points. The gross profit margin of sales was 20.78%, an increase of 5.56 percentage points year-on-year and a decrease of 4.39 percentage points month-on-month; the net profit margin of sales was 7.67%, an increase of 6.24 percentage points year-on-year and a decrease of 2.05 percentage points month-on-month.
Main points of investment:
Spandex boom downturn, product price pressure, the company Q3 net profit month-on-month decline Q3 single quarter, the company realized revenue of 969 million yuan, month-on-month +4.31%; realized parent net profit of 63 million yuan, month-on-month decrease of 16 million yuan. Among them, the gross profit of Q3 of the Company is RMB 201 million yuan, with a month-on-month decrease of RMB 33 million yuan, which is the main reason for the month-on-month decline of Q3 performance of the Company; the sales expenses, management expenses, financial expenses and R & D expenses of Q3 of the Company are-0.07/-0.09/+0.08/-0.04 million yuan respectively, and the expenses during the period of the Company show a downward trend as a whole.
In the case of a slight month-on-month increase in the company's revenue, the company's gross profit month-on-month decrease is mainly due to the decline in gross profit margin. Q3 gross profit margin of the company was 20.78%, a month-on-month decrease of 4.39 percentage points.
Spandex business is still at the bottom of the boom. According to Baichuan Yingfu, the average market prices of Spandex Q2 and Q3 are 31580 yuan/ton and 30742 yuan/ton respectively, and the prices continue to fall; in addition, the overall gross profit margins of Spandex Q2 and Q3 are-4.69% and-8.88%, respectively. Spandex spreads narrowed and gross profit levels fell further, dragging down the company's overall performance. In addition, the aramid market is also facing certain fluctuations in the short term, and the demand for industrial filters applied by meta-aramid is affected to some extent, and the protection market demand still needs to be further expanded.
Aramid continues to expand production, tamp the company's development base
As of the end of 2022, the nominal aramid production capacity of the Company was approximately 21000 tons. The total amount of funds raised by the company's fixed-increase projects is RMB 2.987 billion yuan, involving 17000 tons of para-aramid production capacity and 16000 tons of meta-aramid, totaling 33000 tons. In addition, on July 29,2023, the Company issued an announcement on investment in the construction of high-efficiency intelligent meta-aramid industrialization project, and planned to invest 1.3 billion yuan to build meta-aramid and its derivative products with an annual output of 20000 tons.
According to the company announcement, the company's meta-aramid trial production capacity is about 1.6- 17,000 tons, and para-aramid is under construction, and the capacity will be expanded to about 17,000 tons by the end of this year or Q1 next year. With the gradual implementation and landing of new projects, it is expected to further enhance the Company's market position in the aramid field, promote the continuous growth of the Company's performance, and help the Company consolidate its competitive advantage as a leader in aramid.
The new business is expected to open up a new pattern of company development, and continue to pay attention to breakthroughs such as aramid coating diaphragm.
Focusing on the main business of high-tech materials, the company has determined the development direction of six new businesses: new energy vehicles, intelligent wear, green manufacturing, bio-based materials, information communication and green chemical industry. Based on its own business foundation, the Company continues to explore emerging businesses, which is expected to open up new development space for the Company, and continues to pay attention to breakthroughs in aramid coating membranes, green printing and dyeing projects and future volume.
In terms of aramid coated separator, according to the company's 2023 semi-annual report, aramid, as the coating material with the best comprehensive performance, can bring great value to the development of lithium battery and even new energy automobile industry. Aramid coated separator has excellent performance such as small specific gravity, high strength, puncture resistance, oxidation resistance, good insulation and good compatibility with electrolyte, which can significantly improve the preparation efficiency, high and low temperature discharge, cycle life and safety performance of battery. In March 2023, the company's aramid coated separator pilot production line achieved stable operation, and is currently conducting technical exchanges and product verification with battery manufacturers.
In green printing and dyeing, EcodyTM fiber green treatment technology, a brand-new fiber dyeing process, can be coated and modified on cotton, hemp, silk, wool, leather and viscose materials, so that the coated materials have excellent adsorption performance for dyes, reduce the use of high concentration of salt and alkali in the dyeing process, and greatly reduce the discharge of high salt wastewater in the dyeing process; The new technology is normal temperature dyeing, high dyeing efficiency, adsorption dyeing water can be recycled, greatly reducing the production process of water and fuel consumption; treated fibers, fabrics have antibacterial, far infrared, negative ions and other functions, will bring revolutionary changes to the printing and dyeing industry. 2023H1, the company continues to carry out EcodyTM technology development, scheduling resources to cooperate with customers to carry out application development and small batch proofing of products, digital printing factory and printing demonstration factory will be completed and put into operation in Q3 of 2023. Company green printing and dyeing Yantai Penglai factory, total planning 40,000 tons, do solid color dyeing; Guangdong Foshan printing factory, preliminary planning for about 10,000 tons.
Profit forecast and investment rating comprehensively consider factors such as the company's operation in the first three quarters, product price, market development progress of new projects and new businesses, downstream demand, etc. We moderately adjust the company's profit forecast. It is estimated that the net profit of the company from 2023 to 2025 will be RMB 371 million, RMB 622 million and RMB 862 million respectively, and the corresponding PE will be 36 times, 22 times and 16 times. Considering that the Company, as a leading aramid enterprise in China, continuously strengthens its competitive advantage in terms of capacity expansion, new businesses such as aramid coating membrane and green printing and dyeing are expected to promote the new growth of the Company and maintain the "Buy" rating.
The risks indicate that product prices continue to fall, downstream demand expansion falls short of expectations, new business progress falls short of expectations, project production progress falls short of expectations, raw material prices fluctuate sharply, chemical prices fall sharply, international situation is turbulent, industry policies change sharply, etc.