Maintain an “Overweight” rating. The company's production capacity position continues to be strengthened, and the layout of high-end demand such as civil aviation is ahead of schedule, and the technical ability to customize product processes with customer performance requirements or further contribute to cost reduction results. Considering that prices may remain stable at a low level under pressure from the supply and demand pattern in the civilian sector, the 2024-2026 EPS was adjusted to be 0.36 (-0.52), 0.48 (-0.60), and 0.69 (first) yuan. Since the industry's profitability per ton is low in the cycle, it is possible to adopt the PS method to give 2024 PS 12x, and lower the target price to 32.60 yuan (-23.66) to maintain the “gain” rating.
Sales are expected to be accompanied by an increase in production capacity, and prices are bottoming out. We estimate the company's sales volume in '24 to be around 24,000 tons, an increase of about 33% over the same period. Judging from the absolute value breakdown, the main contributions are expected to come from breakthroughs in wind power, an increase in overseas personnel and exports after storage arrangements, and the continued development of the hydrogen energy pressure vessel business. However, sports and leisure, heat fields, etc. may be relatively stable. 24Q1 estimates that the company's tonne sales price increased slightly month-on-month. Our judgment is mainly due to structural factors. Looking at the 2024 price outlook, the high-performance fiber market industry pattern is relatively stable, so the price stability is higher; however, many mainstream general-purpose fiber companies may have experienced cash losses recently, but the pattern in the general-purpose sector is more intense, and some companies have too high inventories, so there is still a possibility that general-purpose prices will fluctuate further during the year.
The customized model also has room for cost reduction, leading the industry in profit stability. It is estimated that the 24Q1 company's tonnage cost fell month-on-month. The year-on-year decline was affected by a rise in production capacity during the base period, and the continued month-on-month decline showed that the company avoided price competition with standard standards, used customized performance strategies to differentiate prices and reduce costs for each product. This technical idea will continue. The barrier behind this is a deep understanding of the relationship between process stages and performance parameters, not just scale effects. At the same time, the Xining base has increased energy recycling and transformation, so it can be expected that the company's ton cost will continue to be optimized quarterly in '24, and that ton profit will maintain a clear lead in the industry.
The production capacity position continues to be strengthened, and the high-profit demand layout is ahead of schedule. The company's new base in Lianyungang continues to advance according to schedule, and we estimate that it will usher in trial production from the end of '24 to the beginning of '25. Total global demand for carbon fiber declined to a certain extent in '23, but the company's sales volume continued to grow strongly, proving that the company's market share in many important fields has increased markedly. Continued expansion of production capacity will help the company further strengthen its position in the industry. In the field of high-end applications, the company has a leading layout in domestic civil aviation, and continues to accumulate in other aerospace fields. In the future, the Shanghai Composite Material Center is expected to gradually contribute profits starting from the cost center.
Risk warning: Raw material prices fluctuate, and capacity expansion and new product expansion fall short of expectations.