Competition in the carbon fiber industry intensified. The 2024Q3 net profit stage was under pressure in 2024Q3, and the company achieved revenue of 0.386 billion yuan, -0.166 billion yuan year on year, +0.103 billion yuan; realized net profit to mother -0.033 billion yuan, -0.105 billion yuan year on year, -0.017 billion yuan month on month; realized gross profit of 0.045 billion yuan, -0.133 billion yuan year on month, month over month- -0.013 billion yuan. According to Wind, 2024Q3, the average price of carbon fiber in the Chinese market was 87.11 yuan/kg, -21.30% YoY and -6.66%. In terms of price, according to Wind, as of November 4, 2024, the average price of 2024Q4 in China's carbon fiber market was 85 yuan/kg, compared to -2.42% month-on-month in 2024Q3. Prices are expected to bottom out, and they are optimistic that subsequent emerging demand will drive a bottom profit reversal.

In terms of period expenses, 2024Q3's sales/management/ development/ finance expenses were 0.07/0.054/0.026/0.012 billion yuan, respectively, +0.02/+0.01/-0.18/+0.011 billion yuan, and -0.01/+0.011 billion yuan compared to -0.01/+0.08/-0.05/+0.006 billion yuan.

The 30,000 ton project in Lianyungang is progressing in an orderly manner. The company is a national high-tech enterprise specializing in R&D, production and sales of carbon fiber and its composite materials. It is committed to promoting the industrialization of carbon fiber in China. It has long focused on innovative research on high-performance carbon fiber, and has achieved breakthroughs in the key technology of high-performance dry-jet wet spinning carbon fiber industrialization. The product specifications cover 1-48K size wire bundles, forming a full range of carbon fiber varieties of high-strength standard models, high-strength high-strength high-strength high-strength models, and high-strength high-strength high-strength models, and has achieved full coverage of commercialized polyacrylonitrile carbon fiber products.

The company currently has three major bases in Lianyungang, Xining, and Shanghai. Each of the three bases focuses on building a stable triangular industrial pattern. The Lianyungang headquarters adheres to the deep integration of technological innovation and industrial innovation to achieve a new low product energy consumption; it is also driven by market application to position high-end and small-batch diversified products to achieve a continuous increase in production and sales of medium and high model products such as T800 and M40, and continue to maintain the advantages of high value-added products. The scale of the Xining base has taken off, and the full commissioning of Condor Xining has set a new benchmark for the 10,000-ton scale construction of the carbon fiber industry. The full release of production capacity pushes public system facilities to achieve optimal operating models. Relying on the completion of the CCF Condor Shanghai Airlines pre-impregnation project, the company currently focuses on promoting the application verification and evaluation of carbon fiber and its composite materials in low-altitude scenarios such as EVTOL, low-altitude cargo drones, low-altitude manned aerial vehicles, and low-altitude agricultural planters, and continues to cooperate with COMAC to verify the application of typical structural parts such as large aircraft. On October 29, 2024, Zhongfu Condor stated on the investor interactive platform that Zhongfu Condor T700 grade high-performance carbon fiber has now been used in related components of Xiaopeng Flying Car. We believe that emerging fields are expected to drive demand for carbon fiber, further open up the company's growth space, and look forward to the company's long-term growth.

Profit forecasts and investment ratings

Considering the current price and profit situation in the carbon fiber industry, we have moderately adjusted the company's profit forecast. We expect the company's 2024-2026 revenue to be 1.708, 1.989, and 2.807 billion yuan respectively, and net profit to mother will be 0.002, 0.114, and 0.172 billion yuan respectively. The PE corresponding to 2025E and 2026E is 182 times and 120 times, respectively. The company is a leader in the domestic carbon fiber industry, and the only domestic enterprise that has mature mastered 10,000 tons of carbon fiber industrialization technology. As of 2024H1, the carbon fiber production capacity is the top three in the world, and the production of carbon fiber above grade T700 is the highest in the country. The product structure is complete. We are optimistic about the company's growth and maintain a “buy” rating.

Risks suggest policy implementation, new capacity construction progress falling short of expectations, new capacity contribution performance falling short of expectations, fluctuating raw material prices, and a sharp decline in the economy.