The company released its semi-annual performance forecast for 2024. It is expected to achieve net profit of 1-1.15 billion yuan in the first half of the year, an increase of 849.40%-991.81%; net profit deducted from non-mother is expected to be 0.85-1 billion yuan in the first half of the year, an increase of 2186.62% to 2554.85% over the previous year.

The polyester filament boom recovered, and performance improved markedly in the first half of the year. According to the company's performance forecast, the company's net profit attributable to shareholders of listed companies in the first half of 2024 after deducting investment income from joint ventures and joint ventures is estimated to be 0.6 billion yuan to 0.75 billion yuan, an increase of 31.86% to 64.82% over the previous year, indicating a significant increase in the company's main polyester business performance in the first half of the year. This is mainly due to the year-on-year improvement in downstream demand in the polyester filament industry and the end of the large-scale expansion cycle of industry leaders at the supply level. Industry concentration has further increased, and industry synergy is more obvious. The company's product sales volume and price difference are more obvious. There has been an increase, and the industry as a whole is recovering. Looking at a single quarter, the company is expected to achieve net profit of 0.42-0.57 billion yuan in 2024Q2 and a net profit of 0.313-0.463 billion yuan. If the investment income contributed by Zhejiang Petrochemical is excluded, the company's main polyester business is expected to achieve a profit of 0.271-0.421 billion yuan, with a central profit of 0.346 billion yuan, an improvement over Q1.

The price of polyester filament increased year-on-year in the second quarter, and the industry continued to raise prices. According to Baichuan Yingfu's data, the average quarterly prices of 2024Q2, polyester filament POY, FDY, and DTY were 7703, 8195, and 9115 yuan/ton, respectively, +2.56%, +0.32%, +0.56%, +0.32%, +0.32%.

Looking back, the supply-side increase in the industry is expected to be small in 2024, and the industry's price increases have continued recently. By the end of June, the operating rate of polyester filament had dropped to 83.40%. On the demand side, domestic demand and direct exports may slow down this year against the backdrop of a high growth rate last year; however, on the external demand side, the US is going well. If the Federal Reserve cuts interest rates during the year, it will be beneficial for overseas demand to recover. Overall, there is little increase on the supply side this year. The demand side expects a recovery in downstream exports and a steady increase in domestic demand. At the same time, the industry is strongly willing to raise prices, and the industry's prosperity is expected to increase markedly.

Investment suggestion: The company has a polyester filament production capacity of 13.5 million tons and is the leading polyester filament enterprise in China.

In May of this year, the company announced adjustments to the investment amount and project equity structure of Taikun Petrochemical Indonesia's Beijia Refining and Chemical Integration Project. The total investment of the project was reduced to 5.95 billion US dollars, and the company's shareholding ratio rose to 80%. The company's basic earnings per share in 2024 are expected to be 1.20 yuan. The price-earnings ratio corresponding to the current stock price is 13 times, maintaining the purchase rating.

Risk warning: risk of product price fluctuations; risk of large fluctuations in raw material prices; risk of fluctuations in downstream demand; risk of trade friction; risk of export volume falling short of expectations; risk of supply exceeding expectations, etc.