Maintain the shareholding rating and raise the target price: Considering the rising prosperity of the filament industry, we raised the company's EPS to 1.22 yuan in 2025 (1.10/1.55 yuan respectively), and added the 2026 EPS to 1.81 yuan. Refer to the comparable company that gave the 2024 15XPE a target price increase of 18.30 yuan (originally 16.50 yuan) to maintain the “gain” rating.
The full year of 2023 was in line with expectations: the company achieved net profit of 1,086 million yuan in 2023, +628.44% year over year, net profit after deduction of 901 million yuan, or +337.41% year-on-year. The company achieved net profit of 199 million yuan in Q4, +140.75% year over year, after deducting non-net profit of 163 million yuan, +129.24% year over year. The current supply and demand pattern is improving after experiencing the stock buildup - storage removal - recovery cycle in 2023. The industry has maintained a high boom range, and the overall performance is in line with expectations.
The pattern of the filament industry is improving, and the production expansion layout is flexible: the filament industry will add limited new production capacity in 2024, and the concentration of small and medium-sized enterprises will accelerate the clearance industry and further increase. The company plans to produce 2.5 million tons of differentiated polyester fiber materials and 100,000 tons of polyester film materials per year. It is estimated that the first phase will release a total of 650,000 tons over 25 years. The company's production capacity release pace is in line with the industry's growth rate, and product structure differentiation guarantees profit margins. The new project will not change the industry's supply and demand pattern, and the company is expected to gain medium- to long-term profit elasticity among leading polyester filament companies.
Downstream demand is improving, and the price spread is expected to widen: after the 2024 Spring Festival, the operating rate of downstream looms will increase, and the price of filament will increase month-on-month. The average price of 2024Q1POY/FDY/DTY was 6819/7357/7951 yuan/ton, respectively, +2.53%/+2.10%/+1.71% month-on-month. In the context of high oil prices, overseas is expected to boost downstream inventory replenishment expectations, and price spreads are expected to widen to boost the company's profits.
Risk warning: Downstream demand falls short of expectations, and oil prices fluctuate greatly.