Incident: According to Ifind data, as of May 20, 2024, the average price of viscose filament had reached 44,500 yuan/ton, up 1,500 yuan/ton from the beginning of the year. The company is a leader in the viscose filament industry, and companies with strong downstream demand are expected to continue to benefit.
The company's net profit recovered in '23, and the revenue structure was further improved. The full year of 2023 achieved operating income of 3.737 billion yuan, +1.83% year on year; net profit to mother of 0.32 million yuan, +135.20% year on year; 24Q1 achieved operating income of 917 million yuan, +23.74% year on month, -6.44% month on month; net profit to mother of 21 million yuan, +73.74% year on year and +194.11% month on month.
Carbon fiber profits have been under pressure for 23 years, and the low-altitude economy has opened up room for growth in carbon fiber applications. In 2023, the company's carbon fiber business revenue was 366 million yuan, +188.68% year over year, annual sales volume of 0.47 million tons, gross profit margin of -33.83%, or 36.08pct year on year. In 2023, carbon fiber prices dropped significantly due to demand falling short of expectations in the downstream wind power industry and the rapid expansion of carbon fiber production capacity. Prices fell in 23Q1, rebounded slightly in Q2, and continued to decline in the second half of the year. After Q4, the company's carbon fiber business interest rate also declined.
As demand in the wind power industry picks up in 24, the company's demand for large wire bundle carbon fiber is expected to pick up. Furthermore, thanks to the recent intensive introduction of relevant policies, the pace of low-altitude economic development has accelerated. The company has actively laid out a low-altitude economy. Carbon fiber products have been intelligently tested by Ehang and obtained cooperation from China Hengrui and other flying car-related companies, which is expected to significantly improve the company's performance in the future.
The profit level of viscose filament increased significantly in '23, and production capacity was further expanded. In 2023, the company's viscose fiber revenue was 2,688 billion yuan, -15.47% year over year, annual sales volume 70 million tons, gross profit margin 21.47%, +11.27pct year on year. Benefiting from the continued popularity of national clothing such as horse masks, the company has abundant orders for viscose filament and strong production and sales. Previously, the company raised the overall price of viscose filament by 1,000 yuan/ton, which is expected to further increase the company's profits. In terms of production capacity, the company's 10,000-ton viscose filament project has now been completed, and the total filament production capacity after delivery can reach 90,000 tons/year.
Investment advice: The company's net profit for 24-26 is expected to be 1.66/ 2.54/326 million yuan, +414.8%/53.6%/28.3% year-on-year, and EPS of 0.07/0.10/0.13 yuan respectively, maintaining the “buy” rating.
Risk warning: industry cyclical risk, industrial transformation risk, raw material price increase risk, etc.