Key points of investment
Incident 1: The company announced its 2023 performance forecast. It is expected to achieve net profit of 395 to 415 million yuan, after deducting non-net profit of 0.45 to 65 million yuan, all turning a loss into a profit over the previous year. Among them, in the 23Q4 single quarter, it is expected to achieve net profit of 189 to 209 million yuan, turning a loss into profit over the previous year, and a loss of 127 to 147 million yuan after deducting non-net profit. The year-on-year loss has narrowed, and the overall performance is in line with expectations.
Incident 2: The company announced the sixth employee shareholding plan. It plans to raise no more than 800 million yuan of capital, of which 250 million yuan is intended to be used to buy back shares by listed companies. The price is 6.61 yuan/share, and 550 million yuan is intended to be used to purchase shares through the secondary market.
The profit center of filament has been repaired, and the overall PTA is operating under pressure: 1) During 2023, the POY/FDY/DTY price difference increased by 26/144/50 yuan/ton compared to '22, respectively, with an average annual operating rate of 79.5%, an increase of 5.7 pct over 2012. Considering the dilution of fixed costs per ton due to the increase in operating rates and the reduction in energy costs, the profit per ton of long wire improved significantly. Looking backwards, the expansion of production in the filament industry decelerated after 24 years. According to Baichuan Yingfu statistics, it is estimated that only 1.15 million tons of new production capacity will be put into operation in 24, and the capacity growth rate is expected to hit a new low in recent years. 2) According to Baichuan Yingfu statistics, in 2023, China's PTA added production capacity reached 13.1 million tons, an increase of 17% over the previous year. The production capacity growth rate was significantly higher than upstream and downstream. The average PTA price difference during the same period was 346 yuan/ton, down 116 yuan/ton from '22.
The price spread for overseas refined oil products has declined somewhat, and aromatic hydrocarbons have maintained a high boom: 1) The 2023 Southeast Asian gasoline/diesel/aviation coal cracking price difference was 12/24/22 US dollars/barrel, respectively, -2/-15/-8 US dollars/barrel, respectively.
After entering 24 years, due to a decline in the operating rate of overseas refineries and a recovery in travel demand, the price spread for overseas refined oil products has rebounded. As of January 30, the price difference for gasoline, diesel, and aviation coal in Southeast Asia was 15/26/22 US dollars/barrel, respectively. 2) The price difference between PX/pure benzene and crude oil in 2023 was 438/311 US dollars/ton, respectively, and +38/-36 US dollars/ton compared to the previous year, respectively. The overall price is high in history. After 24 years, the price spread for aromatic hydrocarbons widened again. As of January 30, the price difference between PX/pure benzene crude oil was 436/406 US dollars/ton, respectively. Looking backwards, between 2024-2025, China's PX will add only 3 million tons of additional production capacity, and it is expected that the operating rate and profit center of the industry will move upward.
Multiple employee shareholding plans have been launched one after another, demonstrating confidence in long-term development: the company introduced the fifth phase of the employee stock ownership plan in July 23, raising no more than 700 million yuan. The controlling shareholders simultaneously set up a special plan, increasing their holdings by no more than 300 million yuan. This time, the company once again introduced the sixth employee shareholding plan, raising no more than 800 million yuan in additional capital, further demonstrating confidence in long-term development.
Profit forecast and investment rating: Taking into account the pace of demand recovery, we adjusted the company's 2023-2025 net profit to be 4/11/17 billion yuan (previously 3/9/1.2 billion yuan). Based on the closing price on January 31, the corresponding PE was 55.4/20.2/13.5 times, respectively, to maintain a “buy” rating.
Risk warning: raw material prices fluctuate, garment demand falls short of expectations, overseas refined oil market declines