The company is a leading viscose filament company. Recently, the viscose filament business has boomed in production and sales. With the advent of the Guofeng clothing trend, 24Q1's viscose filament showed a trend where supply was in short supply. Production and sales were booming, orders were full, and the boom was high. Currently, the company's viscose filament production capacity is about 0.08 million tons/year, and the construction of another 0.01 million ton viscose filament project was completed in 23. Previously, the overall price of the company's viscose filament products increased by 1,000 yuan/ton, which is expected to further increase profits. The 24Q1 company achieved net profit of 0.021 billion yuan, an increase of 73.7% year on year and 194.1% month on month.

In June '24, the company signed a “Cooperation Agreement” with Jilin Equity Fund Investment Co., Ltd. and Jilin Jichuang Special Technology Venture Capital Partnership (Limited Partnership) to establish a joint venture “Jilin Green Fiber Hi-Tech Fiber Co., Ltd.” The joint venture has a registered capital of 1150 million yuan, and the company invested 650 million yuan in currency and in kind, accounting for 56.52%. The parties agreed to build a “project with an annual output of 50,000 tons of rayon” on the land of the Jilin Economic and Technological Development Zone in the form of joint funding.

The company adopted a differentiated product strategy of viscose filament, and the export ratio is high. The company adopted a differentiated product strategy for viscose filaments to further enhance the market control of leading enterprises. The company continues to upgrade the “continuous, large-scale, homogenized and refined” of viscose filaments. Through the “1+N” spinnability problem, the number of egg changes has been greatly reduced, the operation cycle has been increased, and the packing rate has been further optimized to solve problems such as bright warp threads in rayon, low strength of the embroidery thread, few fine holes, and dyed warps. New products such as various functional fibers developed by the company in cooperation with customers are widely welcomed, and there are more differentiated categories of viscose filaments, making the high-end product market share more than 45%. In addition, the export ratio of the company's viscose filament is high, and downstream customers have spread to more than 20 domestic provinces, cities, autonomous regions, as well as many countries and regions such as Japan, South Korea, Turkey, Pakistan, India, Italy, and Germany.

Actively deploy to the carbon fiber industry and identify breakpoints in the second growth curve. The carbon fiber industry chain is a key industry developed in Jilin Province and the city. As a listing platform under the Jilin Chemical Fiber Group, the company takes full advantage of the advantages of the local carbon fiber industry chain in Jilin on the basis of “consolidating the main business and speeding up upgrading and transformation”, and combines its influence in the chemical fiber industry to actively lay out the carbon fiber industry, find a breaking point in the second growth curve, and steadily advance the strategic goal of “seeking growth”. The company currently has a 0.012 million ton carbon fiber composite production line, and also has 600 tons of small wire bundles of carbon fiber. The company's carbon fiber has high efficiency and is suitable for resin-based composites. The company's carbon fiber is expanding into various fields and can be used in wind power, photovoltaics, building reinforcement, automobile weight reduction, pressure vessels, sports and leisure. Currently, it is mainly in the field of wind power, mainly T400 products. Furthermore, the company already has a layout in the low-altitude economy and has cooperated with companies such as Hengrui and Yihang.

Profit forecasting, valuation and ratings: Considering the impact of pressure on the carbon fiber market, we lowered the company's 24-25 profit forecast and added a 26-year profit forecast. The company's net profit for 24-26 is estimated to be 1.47 (down 30.3%) /2.13 (down 38.2%) /0.26 billion yuan, respectively. We are optimistic about the future development prospects of the company's transformation and upgrading to carbon fiber series products, and maintain the company's “gain” rating.

Risk warning: the release of production capacity falls short of expectations, the price of products and raw materials fluctuates, and the risk that downstream demand falls short of expectations.