Core views

Jilin Chemical Fiber achieved revenue of 920 million yuan in Q1 2024, up 24% year on year and 0.06% month on month; realized net profit of 0.2 billion yuan, up 74% year on year and 194% month on month; realized net profit after deduction of 0.2 billion yuan, up 811% year on year and 176% month on month. The company's revenue/net profit to mother/net profit after deduction for the full year of '23 was 37.4/0.3/0.2 billion yuan, respectively, with year-on-year changes of +2%/+135%/147%, respectively. The company's differentiated strategy strengthens its leading position in the viscose filament industry, and demand such as horse masks is driving the upward trend; at the same time, the company actively lays out the carbon fiber industry to accelerate the release of project production capacity.

occurrences

The company released its 2024 quarterly report: in Q24, it achieved revenue of 920 million yuan, a year-on-year increase of 24% and a decrease of 0.06%; realized net profit of 0.2 billion yuan, an increase of 74% year-on-year and a month-on-month increase of 194%; realized net profit after deduction of 0.2 billion yuan, an increase of 811% year-on-year and 176% month-on-month.

The company released its 2023 annual report: The company's revenue/net profit to mother/net profit after deduction for the full year of '23 was 37.4/0.3/0.2 billion yuan, respectively, with year-on-year changes of +2%/+135%/147%.

Brief review

The company's performance is growing steadily, and the rising popularity of viscose filament is expected to increase profits. The company achieved revenue of 920 million yuan in 2024, an increase of 24% year on year and a decrease of 0.06% month on month; realized net profit of 0.2 billion yuan, up 74% year on year and 194% month on month; realized net profit without deduction of 0.2 billion yuan, up 811% year on year and 176% month on month. The company's revenue/net profit to mother/net profit after deduction for the full year of '23 was 37.4/0.3/0.2 billion yuan, respectively, with year-on-year changes of +2%/+135%/147%, respectively.

By industry, the company's viscose/carbon fiber products achieved revenue of 2,69/370 million yuan, a year-on-year change of -15%/+189%; achieved sales volume of 7.00/0.47,000 tons, a year-on-year change of -41%/+487%; achieved a production volume of 686/0.87 million tons, a year-on-year change of -34%/+682%; achieved a gross profit ratio of 21.5%/-33.8%, a year-on-year change of +11%/-36%.

Production and sales of viscose fiber products declined year on year, mainly due to contract processing and production of short fiber production lines throughout the year; production and sales of carbon fiber products increased year on year, mainly due to the continuous commissioning of 12,000 ton carbon fiber composite projects.

The differentiation strategy strengthens the leading position in the viscose filament industry. Demand such as horse masks is driving the upward trend. The quantity and quality of differentiated products have continued to increase in recent years, and the high-end market share of products has exceeded 45%, further enhancing the market control of leading enterprises, filling gaps in market demand, and further expanding competitive advantage. The company seized the opportunity to expand production capacity a few years ago, seizing the market vacated by companies that have successively withdrawn from the industry, and gradually increased its market share. The company's semi-continuous spunbond filaments have low shrinkage rate and bright dyeing, and are the first choice for making medium to high-end horse mask skirt warps. Recently, with changes on the supply side and demand side, and changes in people's consumption mentality, especially the explosion of horse masks, the company's viscose filament continues to be popular. Production and sales are booming, prices are rising, and orders are sufficient. It is expected that this market will continue for some time. According to Zhuochuang data, since this year, the price of viscose filament has been driven up by demand for horse masks, etc. As of April 30, the company's price was 46,000 yuan/ton, the highest price in the market was 48,000 yuan/ton. The economy is expected to rise further in the future as demand supports it. The company's original production capacity of viscose filament was 80,000 tons/year. The construction of the 10,000 ton viscose filament project to expand production has now been completed, and equipment installation has begun. After it is fully completed in June this year, the production capacity will reach 90,000 tons/year.

Actively lay out the carbon fiber industry and accelerate the release of project production capacity

Large wire bundle carbon fiber is expected to open up more industrial use scenarios during the 14th Five-Year Plan period. The transformation of new energy, mainly wind and solar storage, and the rapid growth of folk sports and leisure have boosted demand for large wire bundle carbon fiber, and the market size is huge. In the long run, the low-altitude economy is expected to become another major downstream demand growth point for carbon fiber in addition to civil aviation, sports and leisure, and new energy fields such as wind power blades, pressure vessels, and photovoltaic thermal field materials. The company's products are widely used downstream and are expected to fully benefit from the growth of the industry. The company's carbon fiber product Ehang Smart has been tested, and has cooperated with DJI drones, etc. The company seizes the opportunity to accelerate the release of project production capacity, actively integrate resources, scale up large-wire carbon fiber products as soon as possible, increase market development efforts for new materials, continue to increase the market share of carbon fiber products, and comprehensively and effectively seize the market dividends of future new material development. The front-end carbonization line for the 12,000-ton carbon fiber composite project, which was privately funded by the company in '23, has been gradually put into operation, and customer certification of composite products is continuing.

Profit forecast and valuation: The company's net profit for 2024, 2025, and 2026 is estimated to be 1,96/3.22/373 million yuan, EPS 0.08 yuan, 0.13 yuan, and 0.15 yuan respectively; the corresponding PE is 46.6X, 28.4X and 24.5X, respectively.

Risk warning: (1) The cyclical risk of the industry. The chemical fiber industry has strong cyclical characteristics. Fluctuations in the global macroeconomic economy, especially in the textile industry, falling market demand or the industry facing cyclical adjustments, will directly cause a decline in demand in the chemical fiber market, which will have a great adverse impact on the company's sales and net profit. (2) Operational risk. Global raw material prices fluctuate greatly. The company's main raw and auxiliary materials have risen to varying degrees, and rising fuel and energy prices have also led to an increase in production costs. At the same time, the impact of the slump in foreign markets still exists, and the same industry has certain inventories, and price restoration and transmission still need to be observed, which will have a certain impact on the company's future performance. (3) Industrial transformation risks. There is a gap between domestic technicians, production processes, and equipment compared to international standards. There is a risk of developing new products, and due to increased market competition, there is also a risk that domestic downstream carbon fiber product application growth falls short of expectations. (4) Production safety risks. Some excipients used in fiber production are corrosive, toxic, and flammable, and there is a risk of production safety accidents due to irresistible causes such as equipment failure or natural disasters.