The company operated relatively steadily in 2023. In 2023, the company achieved operating income of 640 million yuan, +3.89% year on year; realized net profit of 154 million yuan, -10.36% year over year; realized net profit without deduction of 145 million yuan, -2.04% year on year. The company plans to distribute a cash dividend of 0.90 yuan (tax included) for every 10 shares.

UHMWPE fiber production and sales have increased significantly. In 2023, the company's ultra-high molecular weight polyethylene fiber production and sales volume was 5366.51 tons and 4040.95 tons, respectively, up 42.95% and 42.12% year on year; weftless cloth production and sales volume were 1066.39 tons and 607.00 tons, respectively, +8.34% and -15.49% year-on-year respectively.

Production capacity continues to expand, contributing to future growth. According to the company's 2023 annual report, the company currently has a production capacity of 5,320 tons of UHMWPE fiber (including the subsidiary Youhebo) and is currently constructing 3,240 tons, of which the Xintai branch is building 2,240 tons, which is expected to be completed by the end of June 2024; the subsidiary Youhebo (holding 70% of the shares) is under construction of 1,000 tons, which is expected to be completed by the end of March 2024. The company currently has a composite (weftless cloth) production capacity of 1,550 tons and is under construction of 625 tons. The project under construction is expected to be completed by the end of June 2024.

Strengthen the integration of resource mergers and acquisitions. According to the company's 2023 annual report, the company plans to focus on the positioning advantages of the new polymer materials integration platform, integrate high-quality targets of strategic importance to the company through mergers and acquisitions in due course in the field of new polymer materials, accelerate the layout of the new polymer materials sector, continue to broaden the development track, and form a second growth curve.

Profit forecasting and investment ratings. We expect the company's EPS in 2024-2026 to be 0.81, 1.00, and 1.04 yuan, respectively, and 6.17 yuan for BPS in 2024. Referring to comparable company valuations, according to 2024 PE 18-20 times, a reasonable value range of 14.58-16.20 yuan (corresponding to 2024 PB 2.4-2.6 times) was given to maintain the “superior to market” rating.

Risk warning: The pace of commissioning new production capacity falls short of expectations; industry sentiment is declining, etc.