The company released its 2024 semi-annual report. In the first half of the year, it achieved operating income of 48.215 billion yuan, +30.67% year over year; realized net profit attributable to mother of 1.065 billion yuan, +911.35% year over year; realized net profit deducted from non-mother of 0.903 billion yuan, or +4564.68% year over year.

The prosperity of the polyester filament industry has improved, and the company's profit improved markedly in the first half of the year. The company's profit attributable to shareholders of listed companies in the first half of the year after deducting investment income from joint ventures and joint ventures was 0.659 billion yuan, +44.84% year-on-year, indicating a marked increase in the company's polyester business performance in the first half of the year. In the first half of 2024, as domestic steady growth policies continued to gain strength, downstream demand in the polyester filament industry improved significantly compared to the first half of 2023. Product sales and price differences widened, and the industry as a whole was recovering. In terms of profitability, the company's gross profit margin and net margin for the first half of the year were 6.19% and 2.23%, respectively, up 0.25 and 1.9 percentage points year-on-year, respectively.

The main polyester business remained flat month-on-month in the second quarter, and Zhejiang Petrochemical's investment income declined month-on-month. Looking at a single quarter, the company achieved operating income of 27.103 billion yuan (YoY +29.16%, QoQ +28.38%), realized net profit due to mother 0.485 billion yuan (YoY -18.49%, QoQ -16.38%), and achieved net profit of 0.366 billion yuan (YoY -32.35%, QoQ -31.84%) in 2024Q2. Excluding the investment income contributed by Zhejiang Petrochemical, the company's main Q2 polyester business achieved a profit of 0.33 billion yuan, which was basically the same as in Q1.

In the off-season market, the price of polyester filament has weakened, and we are looking forward to the release of demand for gold, nine, and silver. In July-August, polyester filament prices declined due to weak downstream demand and a downward trend in crude oil prices. As of August 28, the prices of polyester filament POY, FDY, and DTY were 7,400, 7900, and 8950 yuan/ton, respectively, compared with -8.07%, -7.60%, and -5.04% in early July. However, some companies cut prices and promoted this week, and industry inventories have been removed. According to Baichuan Yingfu's data, industrial factory inventories last week were about 2.0988 million tons, or -43.69% year-on-year, down 32.86% from the relative high in mid-late July. Looking ahead, on the demand side, the industry's traditional peak season is approaching, and we expect the release of downstream demand from Jinjiuyin 10; on the supply side, there will be little new production capacity for polyester filament in 2024, and the industry concentration is high, which is beneficial to enterprise collaboration. In the future, the price and spread of polyester filament are expected to improve as demand starts during the peak season.

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

The company's basic earnings per share in 2024 are expected to be 1.04 yuan. The price-earnings ratio corresponding to the current stock price is 11 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.