Event: The company released its 2024 semi-annual report. The company 24H1 achieved revenue of 13.744 billion yuan, +9% year-on-year, and achieved net profit of 1.518 billion yuan to mother, +12% year-on-year. Among them, 24Q2 achieved revenue of 7.087 billion yuan, +10%/+6% month-on-month; realized net profit of 0.835 billion yuan, +15%/+22% month-on-month; realized net profit of 0.799 billion yuan without return to mother, +15%/+22% month-on-month.
The 24H1 spandex industry is weak, and the price of adipic acid fluctuates in a narrow range. According to Baichuan Yingfu, 24H1 China's spandex industry added 0.105 million tons/year. The oversupply situation in the industry intensified, and the price of PTMEG, the main raw material, was weak. The average price of 24H1 was 15,611 yuan/ton, -21% over the same period last year, and the cost support was weak. The profit of spandex is under pressure. The average price in the 24H1 domestic spandex market was 27,994 yuan/ton, -16% year over year, and the average price difference was 12,303 yuan/ton, -14% year over year. The average price of 24H1 adipic acid was 9,696 yuan/ton, -1% year-on-year. 24Q2 Company profitability recovered month-on-month. The production and sales volume of 24H1's main products in the spandex and adipic acid sectors all increased year-on-year. 24H1's chemical fiber/new chemical materials/basic chemical products segment revenue was 4.654/3.036/5.261 billion yuan, respectively, -0.11%/+42.38% year-on-year, and gross margin was 14.97%/21.78%/15.45%, -0.71/-3.52/-1.87pct. The overall gross margin/net margin of the 24H1 company was 16.52%/11.06%, -0.97/+0.29pct; of these, 24Q2 gross margin was 16.88%, -0.04/+0.76pct, net margin was 11.83%, and the month-on-month +0.49/+1.58pct.
The company expands PTMEG production capacity and consolidates the advantages of integration. As of June '24, the company's cumulative investment for the 1.15 million tons/year adipic acid expansion project (phase 6) had reached 92.06% of the budget, and the proportion of the differentiated spandex project with an annual output of 0.3 million tons had reached 39.83%. At the end of 2023, the company announced that it will invest 502 billion yuan and 2.04 billion yuan respectively to build a 1.1 million ton gas integration project and a spandex industry chain deepening project. On July 12, 2024, the company will make additional investments to adjust the PTMEG production capacity of the spandex industry chain deepening project from 0.12 million tons/year to 0.24 million tons/year, further consolidating the company's industrial integration advantages.
Investment advice: The company's size advantage is significant. We expect the company's net profit to be 3.107/3.666/4.003 billion yuan in 24-26, corresponding PE of 11.8/10.0/9.2x, maintaining a “buy” rating.
Risk warning: raw material prices fluctuate, downstream demand falls short of expectations, capacity release falls short of expectations, etc.