Year-on-year increase in interim results: The company disclosed the 2024 mid-year report. During the reporting period, it achieved operating income of 13.744 billion yuan, an increase of 8.89% over the previous year; realized net profit to mother of 1.518 billion yuan, an increase of 11.74% over the previous year. Among them, the second quarter achieved operating income of 7.087 billion yuan, an increase of 10.2% year on year, and realized net profit to mother of 0.835 billion yuan, an increase of 14.86% year on year. The main reason for the year-on-year increase in revenue and profit is that production capacity for the company's main products, spandex and adipic acid, was effectively released in the first half of the year, and production and sales increased year-on-year.
There is a clear advantage at the bottom of the economy: according to our tracking, the unit price difference between spandex and adipic acid in the first half of 2024 decreased significantly compared to the same period in 2023. Among them, spandex decreased by about 1,400 yuan/ton year on year, and adipic acid decreased by about 1,200 yuan/ton year on year. Under such a severe situation in the industry, the company still achieved contrarian growth through volume compensation and cost optimization, highlighting the company's strong competitiveness in the industry.
The new project is progressing in an orderly manner: the company's 0.3 million ton differentiated spandex project will continue to release production capacity, while construction of the 1.1 million ton gas integration project and the 0.24 million ton PTMEG project has also begun. Among them, the spandex project will continue to drive the increase in production and sales of the company's core products, while the integrated natural gas project and PTMEG project will deepen the integrated advantages of the company's spandex industry chain and further enhance the company's cost competitiveness.
Based on the company's interim report and recent changes in the spandex and adipic acid industry, we adjusted the forecast for the company's spandex and adipic acid production, sales volume, price and unit gross profit. We adjusted the company's earnings per share for 2024-2025 to 0.54 and 0.60 yuan (the original forecast was 0.53 and 0.61 yuan), and added the 2026 EPS forecast to 0.68 yuan. According to comparable companies' PE 15 times in 24 years, the adjusted target price was 8.10 yuan, maintaining the purchase rating.
Risk warning
Demand fell short of expectations; raw material prices soared; the progress of new projects fell short of expectations; the impact of spandex production expansion on the profit center of the industry.