Profits are gradually recovering. In 2023, the company achieved operating income of 82,640 billion yuan, an increase of 33.30% over the previous year, and achieved net profit of 797 million yuan, an increase of 539.10% over the previous year. Looking at a single quarter, 1Q23-4Q23 achieved net profit attributable to mother - 490 million yuan, 595 million yuan, 798 million yuan, and -107 million yuan, respectively. In 2023, domestic demand recovered, and profits for polyester filament improved. At the same time, the company released new production capacity centrally, and filament production and sales increased significantly compared to the same period. In the first quarter of 2024, the company achieved operating income of 21.111 billion yuan, +32.66% year-on-year; net profit to mother was 580 million yuan, reversing losses year-on-year and month-on-month.
PTA-filament profits improved significantly year over year. By sector, the main contribution of the PTA-polyester filament business in 2023 was 520 million yuan to the mother's net profit, an increase of 16.1 billion yuan over the previous year, which significantly reversed losses; the investment income for joint ventures and joint ventures was 270 million yuan. In the first quarter of 2024, the main PTA-polyester filament business contributed 330 million yuan to net profit, an increase of 310 million yuan over the previous year, reversing losses from month to month; investment income in joint ventures and joint ventures was 250 million yuan, an increase of 760 million yuan over the previous year.
Polyester filament: Increased production capacity was gradually put into operation, and filament production and sales increased steadily. In 2023, the company produced 10.43 million tons of polyester filament (POY/FDY/DTY), +34.2% year over year; sales volume of 10.31 million tons, +35.0% year over year; production and sales rate of 98.8%. In the first quarter of 2024, the company produced 3.14 million tons of filament, +62.8% year on year; sales volume of 2.59 million tons, +34.7% year over year; production and sales rate of 82.3%.
PTA - polyester production capacity is steadily expanding, consolidating the leading position. As of 2023, the company's crude oil processing equity was 10 million tons; PTA production capacity of 10.2 million tons/year; polymerization production capacity was 13 million tons/year; polyester filament production capacity was 13.5 million tons/year (adding 3.9 million tons/year during the year). The global market share of filament was 18%, and the domestic market share was 28%, continuing to rank first in the world. In the future, the company's filament production capacity will continue to expand steadily. The Youshun 600,000 ton and Fujian Henghai 600,000 ton projects are scheduled to be put into operation in 2025.
Launched the 16 million tons/year Indonesian refining and chemical integration project. The company plans 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 forecast and investment rating: We expect the company's 2024-2026 EPS to be 1.30, 1.77, and 2.16 yuan, respectively, and 15.82 yuan for BPS in 2024. Referring to the valuation level of comparable companies, they were given 12-14 times PE in 2024, corresponding to a reasonable value range of 15.60-18.20 yuan (PB 1.0-1.2 times in 2024), maintaining a “superior to market” rating.
Risk warning: Product prices fluctuate greatly; progress of new projects falls short of expectations; profits of Zhejiang Petrochemical refining and chemical projects fluctuate.