Core views
Since its listing, the company has continued to grow based on endogenesis. By the end of 2022, the company's polyester industrial yarn production capacity had increased to 289,000 tons/year, and the differentiation rate continued to rise. Among them, the 11,000-ton industrial wire project of the Vietnamese company had been put into operation, and the remaining 31,000 tons of production capacity were gradually put into operation according to certification conditions; the production capacity of drapes increased to 60,000 tons; the annual production capacity of 12 million square meters of petroplastic flooring was put into production; and the two production lines for the high-end rolled film project with an annual output of 47,000 tons had successfully completed equipment installation and commissioning. The gradual release of production capacity will gradually increase performance. In addition, based on the advantages of the original PVC film business, the company strategically placed photovoltaic reflective material products, mainly used to enhance the power generation efficiency of photovoltaic backsheets and suitable for desert and Gobi conditions. The first project was launched on a pilot project in Oman and obtained orders for the installation and use of foreign power plants. Currently, domestic and foreign markets are being actively promoted.
occurrences
The company released the 2023 three-quarter report
In the first three quarters of 2023, the company achieved revenue of 4.262 billion yuan, a year-on-year increase of 1.13%, and net profit of 272 million yuan, a year-on-year decrease of 3.10%. Revenue for Q1, Q2, and Q3 was 1,351, 14.19, and 1,492 billion yuan respectively, and net profit was 0.67, 1.05, and 100 million yuan respectively.
Brief review
Increase the differentiated layout, and Q3 profit improved year over year
In 2023, there was no significant increase in demand in the global polyester products industry, and the common yarn market continued to weaken. According to Wind, the average price of industrial yarn in the first three quarters of 2023 was 8871 yuan/ton, down 5.40% year on year. The price difference was 2,487 yuan/ton, down 0.93% year on year. Under the severe external environment, the company maintained good profitability in the third quarter of this year by increasing the proportion of differentiated products through scientific and technological innovation, deepening cost reduction and efficiency, and adjusting the regional structure of export sales through overseas production capacity to reduce the impact of trade barriers. In the first three quarters of 2023, the company achieved revenue of 4.262 billion yuan, an increase of 1.13% over the previous year, and achieved net profit of 272 million yuan, a year-on-year decrease of 3.10%. Gross margin was 15.95%, down 1.2pct year on year, and net profit margin was 6.43%, down 0.31pct year on year.
According to Wind, the average price of Q1, Q2, and Q3 industrial yarn in the first three quarters of 2023 was 8939, 8892, and 8783 yuan/ton, respectively, with price differences of 2676, 2503, and 2285 yuan/ton, respectively. Looking at the third quarter alone, the company achieved revenue of 1,492 billion yuan, an increase of 4.37% over the previous year, and net profit of 100 million yuan, an increase of 46.16% over the previous year. Gross margin was 16.91%, up 1.23pct year on year, net profit margin was 6.77%, up 1.90pct year on year.
Production capacity is gradually being introduced, and the prospects for photovoltaic reflective films are broad
In terms of industrial yarn and cord cloth, the production capacity of Vietnam's differentiated polyester industrial filament (phase I) project with an annual output of 110,000 tons has been fully released. The full commissioning of this project will facilitate the rapid increase in the company's polyester industrial yarn production capacity, thus further enhancing the company's profitability and market competitiveness. In terms of cord cloth, after certification of cord products and market cultivation in previous years, the company's cord products have successfully entered the tire manufacturers of top international brands such as Michelin, Bridgestone, Goodyear, and Mainland (Ma Brand). With the continuous advancement of new customer certification and new market development, the last cord production line of the 30,000 ton high-performance tire curtain technical improvement project in 2022 has completed installation and commissioning for trial production. The company's curtain production capacity has reached 60,000 tons. In August 2023, the company announced plans to implement 18,000 tons of high-performance tire drapes per year Vietnam ( (Phase I) project. This project is an expansion project for the company's production base in Vietnam, with a total investment of about 52 million US dollars.
In terms of other products, at present, the two production lines of the high-end rolled film project with an annual output of 47,000 tons have successfully completed equipment installation and commissioning. As the new equipment is gradually put into operation, the high-end market share will be further expanded. The stone plastic decking project with an annual output of 12 million square meters has been put into operation. At the same time, an automated production line has been introduced to improve production efficiency. With the further release of stone plastic decking production capacity, there is broad room for market development in the future. The gradual release of these projects is expected to gradually contribute to increased performance.
In addition, based on the advantages of the original PVC film business, the company strategically lays out photovoltaic reflective material products, mainly used to enhance the power generation efficiency of photovoltaic backsheets and is suitable for desert and Gobi conditions. The first project was piloted and orders were obtained for the installation and use of foreign power plants. Currently, domestic and foreign markets are being actively promoted. In the future, the company will transform and upgrade to an integrated solution provider, and the market prospects are broad.
Profit forecast and valuation: The company's net profit for 2023-2025 is estimated to be 3.86, 4.89, and 556 million yuan respectively, and the EPS is 0.33, 0.42, and 0.48 yuan respectively, corresponding to the current stock price PE of 16.3X, 12.8X, and 11.3X respectively. Maintain a “buy” rating.
Risk warning: Risk of macroeconomic fluctuations (global macroeconomic fluctuations or changes in national macro-control may cause the growth of the national economy or consumer demand to slow down, which may affect the growth of the company's market); large fluctuations in raw material prices (the main raw materials used in the company's production are downstream products in the petrochemical industry. Their prices are greatly affected by fluctuations in international crude oil market prices, and there is great uncertainty in raw material prices, making it more difficult for the company in terms of inventory management, procurement strategies and cost control, which in turn affects the stability of the company's overall operations and profitability); Risk of exchange rate fluctuations (the company's export sales mainly use US dollars and euros as settlement currencies, and overseas business is growing continuously, so exchange rate fluctuations may affect the company's profitability); the company's production capacity investment falls short of expectations (if the company's project construction falls short of expectations, it will affect product sales, which in turn affects profit).