Introduction to this report:
The company is a leader in the domestic nylon 66 industry. It lays out raw materials such as adiponitrile, hydrogen ammonia, aminohexanitrile, etc., to achieve autonomous and controllable industrial chain, expand downstream fields such as civilian wire and special nylon, and help the company open a new chapter.
Key points of investment:
Covered for the first time, an increase in holdings rating is given. The company is a leader in the domestic nylon 66 industry, and the industrial chain layout is constantly being improved. The company's 2024-2026 EPS is expected to be 0.39/ 0.57/ 0.70 yuan. Referring to comparable companies, combined with the PE/PB valuation method, the company was given a target price of 9.84 yuan in 2024 (corresponding to 25.23 times PE, 1.27 times PB).
A breakthrough was made in the localization of upstream adiponitrile, and the release of nylon 66 is imminent. Supply side: Domestic adiponitrile technology has achieved a breakthrough, nylon 66 is self-sufficient in upstream raw materials, and the industry is about to expand production volume. Demand side:
Nylon 66 has excellent performance, and the trend of automobile lightweighting and the expansion of production in the tire industry are expected to drive growth in demand. Furthermore, the promotion of nylon 66 in the civilian field is also expected to open up room for growth. Overall, demand for nylon 66 is expected to continue to grow, and Shenma Co., Ltd. is expected to benefit as an industry leader.
Actively expand and repair the chain to open a new chapter in the company's development. Upstream layout: The company built its own hydrogen-ammonia project to increase the proportion of raw materials supplied by itself. The company's 50,000 ton butadiene adiponitrile project is expected to be put into operation by the end of 24 to achieve self-sufficiency in adiponitrile, a key raw material. The company's controlling shareholder's 20,000 ton aminohexanitrile project has been put into operation, and 100,000 tons of production capacity has been built to develop downstream caprolactam products and a new process route for caprolactam to make hexanediamine to achieve collaborative development of the nylon industry chain. Downstream layout: The company actively lays out the fields of special nylon, civilian chips and civil wire, and the demand space for nylon 66 is expected to open up. The overseas layout is progressing in an orderly manner. The company plans to build a 20,000 tons/year nylon differentiated fiber project in Thailand to meet and expand the development needs of the tire manufacturing industry in Southeast Asia and North America.
Catalysts: The adiponitrile project is progressing smoothly; the field of civil wire is expanding smoothly.
Risk warning: raw material prices fluctuate; projects under construction fall short of expectations; downstream demand for nylon 66 falls.