Introduction to this report:
At the bottom of the boom, the company's 24Q1 performance was under pressure. The company lays out raw materials such as adiponitrile, hydrogen ammonia, and aminohexanitrile upward to achieve autonomy and control of the industrial chain, lays out special nylon downward, and has joined hands to enter the PA66 civilian sector.
Key points of investment:
Maintain an “Overweight” rating. The downturn in the PC/BPA boom put pressure on the company's performance in 24Q1.
Maintain the company's 24-26 EPS at 0.39/ 0.57/ 0.70 yuan. Referring to comparable companies, considering that the company is a leader in the nylon 66 industry and that there are certain barriers upstream in the industry, the company was given 25.23 times PE for 24 years, and the target price for 24 years was 9.84 yuan.
24Q1 performance is under pressure. The company released its 24Q1 quarterly report, and achieved operating revenue/net profit of 3355/31 billion yuan in 24Q1, +12.29%/+243.05% over the same period last year. -3.81/ -41.51% month-on-month. The main reason for the pressure on performance is that the nylon 66 industry, the main product of 24Q1, is still at the bottom of the boom, and the decline in prices of products such as adipic acid/bisphenol A/PC is being dragged down.
Production and sales increased year on year, and the prices of bisphenol A and PC continued to fall. In 24Q1, the company completed nylon 66 industrial wire/nylon 66 cord cloth/nylon 66 slices/refined adipic acid/civilian silk/bisphenol A/PC/-9.66%/-14.73%/-3.96%/-3.08%/-9.66%/-14.73%/-3.96%/-30.07%/-2.45%, respectively. Prices of the company's main products increased slightly, but the price of bisphenol A/PC was -6.30%/-5.96% month-on-month. 24Q1 sales gross margin/net profit margin was 11.32%/1.63%, -1.84/ +1.51pct year over year, and -1.83/ -0.36pct month-on-month, respectively. Profitability is still under pressure.
Join hands with Weili to expand PA66 in the civilian field. The company announced that it cooperated with Yili to establish a company in Pingdingshan. At the same time, it also acquired 25% of each shares of Yilijin and Yili Plastics, and increased capital to Yili Nylon to enter the field of nylon 66 high-end civilian yarn. In terms of the industrial chain layout, the company's self-built hydrogen ammonia project has been put into operation. The 50,000 ton adiponitrile project is expected to be put into operation by the end of 24, achieving 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. 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.
Risk warning: raw material prices fluctuate; projects under construction are postponed; demand for nylon 66 falls.