The losses were reversed year over year in 2023. In 2023, the company achieved operating income of 61,469 billion yuan, +21.03% year-on-year; realized net profit to mother of 1,086 billion yuan, reversing losses over the previous year. Among them, 4Q23 achieved net profit of 199 million yuan in a single quarter, reversing losses over the previous year. The company plans to pay a cash dividend of 0.255 yuan (tax included) per share, with a cash dividend ratio of 35.35%.
Polyester fiber production and sales increased steadily year over year. In 2023, the company's polyester filament production and sales volume was 6.8 million tons and 6.82 million tons, respectively, up 18.6% and 18.7% year on year; short fiber production and sales volume was 1.1173 million tons and 1.666 million tons, respectively, up 129.0% and 149.2% year on year.
Downstream demand has been repaired, and gross margin has improved. With the marginal improvement of supply and demand in the industry, the gross margin of the company's chemical fiber products increased. The gross profit margin of chemical fiber products in 2023 was 5.77%, an increase of 2.30 percentage points over the previous year.
Production capacity is expanding steadily. According to the company's 2023 annual report, the company has a civilian polyester filament production capacity of 7.4 million tons/year, an increase of 1.1 million tons over the end of 2022, with a domestic market share of more than 12%; polyester staple fiber production capacity is 1.2 million tons/year. The company plans to increase silk production capacity by 400,000 tons and 650,000 tons respectively in 2024-2025, and future production capacity investment will steadily advance according to industry demand. In addition, the company has 5 million tons of PTA production capacity and plans to produce 5.4 million tons of PTA. It is estimated that by the first half of 2026, the company's PTA will reach 10 million tons.
Launched the 16 million tons/year Indonesian refining and chemical integration project. The company issued an announcement to launch Taikun Petrochemical's integrated refining and chemical project in Northern Indonesia. Taikun Petrochemical holds 90% and 10% of Huacan International's shares respectively. Among them, Tongkun Co., Ltd. and Xinfengming hold 51% and 49% of Huacan International's shares respectively. The total investment approved for the project is US$8.624 billion (of which US$2,615 billion is self-funded and US$6.09 billion in domestic and foreign bank loans), and it is planned to invest in the construction of 16 million tons/year of refining, 5.2 million tons/year of PX, and 800,000 tons/year of ethylene. According to the company announcement, the average annual revenue after completion of the project was US$10.438 billion, the average annual profit after tax was US$1,328 billion, and the financial internal rate of return after tax was 16.68%.
Profit forecasting and investment ratings. We expect the company's 2024-2026 EPS to be 1.23 yuan, 1.55 yuan, 1.71 yuan (24-25 was 1.23 yuan, 1.61 yuan), and the 2024 BPS 11.88 yuan, according to 2024 EPS and 14 times PE, corresponding target price 17.22 yuan (corresponding 1.4 times PB in 2024) (original target price 14.00 yuan, 20 times PE in 2023, +23%), maintaining the “superior market” investment rating.
Risk warning: Project construction progress falls short of expectations; product prices fluctuate greatly.