Introduction to this report:
2024Q1 benefited from strong demand for downstream inventory replenishment. The company's revenue increased 52% year over year, and profits doubled; in 2024, the company's orders are improving, and the trend of strong production and sales is expected to continue, and high annual performance can be expected.
Key points of investment:
Investment advice: Retain] Holding the 2024-2026 EPS forecast of 0.68/0.83/0.97 yuan, giving 2024 a PE slightly lower than the industry average, maintaining a target price of 12.92 yuan, and maintaining the “increase” rating.
Incident: 2024Q1 revenue was 1.47 billion yuan, +51.7% year over year, net profit to mother was 150 million yuan, +101.1% year over year, net profit after deduction of non-return mother was 140 million yuan, +377.7% year over year. The performance exceeded expectations.
Q1 Production and sales were strong, and the performance was impressive and the increase was high. As downstream brands switch from inventory removal to inventory replenishment, demand for the company's downstream filament, cloth and fabric orders are strong, and Q1 revenue has risen beautifully by 51.7%. The company's production capacity utilization rate is expected to remain high, and the gross margin increased by 2.8 pcts over the same period last year. Thanks to the company's good production management capabilities, the management cost ratio was -1.7 pct year on year, and the cost side improved markedly. In addition, 2024Q1 accrued asset impairment of 0.26 million (mainly inventory impairment), a significant year-on-year improvement (2023Q1 was 41 million), so the company's profitability increased significantly, and the net interest rate was +2.5 pct year-on-year.
Production capacity continues to rise, and high annual performance can be expected. The company is a leader in the nylon industry chain. It has outstanding competitive advantages. It can customize and develop various series of high-end functional fabrics for global customers, such as environmental health, outdoor sports, etc., and downstream demand continues to improve. The company's new production capacity of 60,000 tons of Huai'an PA66 is expected to gradually rise, and performance flexibility is expected to continue to be released. At the same time, the company is actively promoting the 20,000 ton renewable nylon project. Currently, the supply of renewable fiber is in short supply. It is expected that 2024 will contribute to the increase in performance, and the company's annual performance can be expected to increase rapidly.
Risk warning: New production capacity falls short of expectations, risk of exchange rate fluctuations