Matters:
The company released its 2023 annual report. In 2023, it achieved revenue of 82,640 billion yuan, +33.3% year on year, net profit to mother of 797 million yuan, an increase of 539.1% year on year, net profit excluding non-return to mother of 455 million yuan, an increase of 5208% year on year.
Among them, Q4 achieved revenue of 20.898 billion yuan, a year-on-year increase of 41.16%, a year-on-month decrease of 15.9%, net profit of 10.7 million yuan, a year-on-year increase of 94.10%/a decrease of 113.4% month-on-month, after deducting net profit of non-return to mother of 267 million yuan, a year-on-year increase of 85.73% /month-on-month decrease of 136.7%.
The company released its 2024 quarterly report. 2024Q1 achieved revenue of 21.111 billion yuan, a year-on-year increase of 32.66% /1.02% month-on-month, net profit of 580 million yuan, a year-on-year increase of 218.01% /644.33% month-on-month, and net profit of 537 million yuan after deducting non-return to mother net profit of 537 million yuan, a year-on-year increase of 203.02% /301.11% month-on-month.
Commentary:
Prices in the 23Q4 industry declined month-on-month, and there was a certain accumulation of stocks. Q4 The company's filament sales volume is 3.089 million tons (POY/FDY/DTY ratio is 75%/15%/10%). Judging from industry data, the average price of Q4 polyester filament POY/FDY/DTY was 7531/8132/8882 yuan/ton, respectively, +1.8%/+2.7%/+2.9% year-on-year, and -2.3%/-1.6%/-3.5% month-on-month respectively. Judging from the operating situation of the industry, the operating rate of the Q4 filament industry was 94.1%, +124PCT/month-on-month +6.6PCT. The number of POY/FDY/DTY inventory days was 14.92/19.54/25.92 days, -12.93/-9.25/ -9.01 days, and +2.85/+1.90/+2.71 days month-on-month, respectively.
The improved filament pattern led to a strong rebound in Q1 results, and full-year results can be expected. Since the beginning of 2024, due to a year-on-year increase in export orders and a sharp increase in the operating rate of domestic downstream looms, the price of Q1 filament has increased month-on-month. Sales declined month-on-month due to downstream Spring Festival shutdowns, but the year-on-year increase was significant. The company's filament production capacity is 13.5 million tons. According to operating data, the total sales volume of filament Q1 was 2.585 million tons, +35%/-14% month-on-month, with POY/FDY/DTY sales accounting for 75%/16%/9% respectively; in terms of unit price, the average price of Q1POY was 0.68 million yuan/ton, +2.4% YoY /month-on-month, +2.3% month-on-month, and the average price of FDY was 0.77,000 yuan/ton, +3.6% month-on-month, and the average DTY price was 0.84 million yuan/ton. 1.9% /month-on-month +2.8%.
In terms of PTA, the company currently has a production capacity of 10.2 million tons, mainly for personal use. In 24Q1, sales volume was 318,600 tons, with an average price of 0.52 million yuan/ton. Looking ahead to '24, the additional production capacity for filament will be 1.16 million tons, and the shutdown capacity will reach 930,000 tons. That is, the incremental filament production capacity in '24 is only 230,000 tons, and the supply-side growth rate has declined significantly. Furthermore, on the inventory side, inventory is expected to return to pre-inventory levels in '24. With a healthy recovery in supply and demand, the 24-year filament profit center is expected to open up an upward channel, and the company will enjoy greater flexibility.
A leader in the filament industry, went overseas to build Indonesian refining and chemical projects to strengthen its integrated advantages. The company's production capacity has clearly increased in recent years. According to the company's production expansion pace, the company currently expects to have 13.5 million tons of polyester filament and 10.2 million tons of PTA production capacity. The global market share of filament exceeds 18% and the domestic market share exceeds 28%, ranking first in the world.
As the overall increase in production capacity in the filament industry slows down, the company's business focus will focus on upstream refining: in June of last year, the company announced Taikun Petrochemical's integrated refining and chemical project in Indonesia. Taikun Petrochemical is the main investor. The company holds 45.9% of the shares, and the crude oil processing capacity of the project is 16 million tons/year.
Investment advice: Considering that the company's Indonesia and other projects are progressing slightly later than previously anticipated, we lowered our previous profit forecast for the company. We expect the company's net profit to be 29.36/41.83/5.265 billion yuan for 2024-2026 (37.46/5.829 billion yuan before 24-25), corresponding to EPS 1.22/1.73/2.18 yuan for 24-26. The current market value of PE is 13x, 9x, and 7x, respectively. Referring to comparable company valuations, the 2024 PE was given 16.7 times, corresponding to a target price of 20.37 yuan, which was raised to a “strong push” rating.
Risk warning: crude oil prices fluctuated sharply, the recovery in downstream demand fell short of expectations, and the progress of production capacity construction and release fell short of expectations