The company's recent situation
The company announced that it intends to adjust the equity structure, investment amount and project scale of the Indonesian North Canadian Refining and Chemical Integration Project:
The company's shareholding ratio was adjusted from 45.9% to 80%; the project investment amount was adjusted from US$8.624 billion to US$5.948 billion; the project scale was adjusted from the original 16 million tons of refining, 5.2 million tons of PX, and 800,000 tons of ethylene to 10 million tons/year of refining, 2 million tons of PX, and 1.2 million tons of ethylene. The company makes corresponding adjustments to the process routes, product plans, etc. involved in accordance with the investment amount and project scale adjustments.
reviews
The shareholding ratio in the Indonesian refining and chemical project was raised to 80%. According to the company's announcement, the Taikun Petrochemical project is still in the early application stage. Overseas, the “Taikun Petrochemical Indonesia Integrated Refining and Chemical Project Investment Commitment Agreement” has been signed with the Indonesian Ministry of Maritime Affairs and Investment Coordination, and has passed the Indonesian EIA. The company's current adjustments to the equity structure, investment amount, and construction scale of the Indonesian refining and chemical project are the result of agreement among investors based on the principles of prudent decision-making, risk control, and steady progress. With this adjustment, the total investment in the project has decreased and the annual refining scale capacity has decreased. We expect that it will be more conducive to project approval. Furthermore, due to the increase in the company's shareholding ratio in the Indonesian project, it will dominate the project; if the project progresses smoothly, the company has more room for long-term development.
Leading polyester filament companies are jointly raising prices and hoping for stable profits. Since March, the overall production and sales of polyester filament have been weak. The operating rate of leading companies has remained high, and the POY and FDY industries have slightly higher inventories. In order to control inventory levels, the industry has had many price reduction promotions. The price spread of filament continued to narrow, and there were phased losses. Among them, POY losses were significant. Under these circumstances, leading companies began to raise prices. According to CCF data, several leading companies increased their POY prices by 50-300 yuan, and FDY and DTY prices increased by 0-100 yuan. All types of filament can turn losses into profits. However, since raw materials were stocked downstream in the early stages, and industry demand was in a low season, downstream procurement was relatively lackluster after leading companies raised prices. Leading companies have raised prices quite a bit this time. Small manufacturers have taken the opportunity to actively ship products, and downstream is still on the sidelines. We believe that leading filament companies raise prices in the off-season to maintain reasonable profits in the industry, and that the competitive pattern of the industry has improved slightly, which is conducive to safeguarding the medium- to long-term profit level of the filament industry.
Profit forecasting and valuation
Maintain the 2024/2025 net interest rate of 3.143 billion yuan/4.911 billion yuan, and the current stock price corresponds to 11.9 times/7.6 times the 2024/2025 price-earnings ratio. Maintaining an outperforming industry rating, due to a slight improvement in the industry competition pattern and an upward shift in the industry valuation center, we raised our target price by 8.3% to 18.3 yuan, which corresponds to 14.0 times/9.0 times the 2024/2025 price-earnings ratio. There is 17.8% upside compared to the current stock price.
risks
Long silk's boom is sluggish; Zhejiang Petrochemical's profits fall short of expectations; Indonesian project approval progress falls short of expectations.