The company released the 2023 financial report and future dividend plan

23Q4 revenue was 1,578 million yuan, up 57.9%; to mother 122 million, up 527%; after deducting not 116 million, the same increase was 824%;

Revenue of $5.09 billion in 2023 was $5.09 billion, up 27.1%; deducted from mother of $450 million, deducted of non-364 million yuan, and increased 88.9%; 2023 non-recurring profit and loss was mainly government subsidies of about $144 million included in current profit and loss.

The company plans to pay a cash dividend of 140 million in 2023, with a dividend rate of 32%; and plans for the next three years: ① when the development stage is mature and there are no major capital expenses, the dividend rate is 80%; ② when the development stage is mature and there are major capital expenses, the dividend rate is 40%; ③ when the development stage is mature and there are major capital expenses, the dividend rate is 20%.

In 2023, the company's filament revenue was 2.62 billion yuan, with a gross profit margin of 17.7%, a decrease of 1.4 pct; billet revenue of 1.2 billion yuan, an increase of 43%, gross profit margin of 23.8%, and a decrease of 0.74 pct; finished fabric was 1.13 billion yuan, with a gross profit margin of 27.7%, an increase of 4 pcts.

Looking at the core subsidiaries, the revenue of Jiahua Nylon (nylon filament production and sales) was 2.87 billion yuan, an increase of 12%, and net profit of 290 million yuan, an increase of 17%;

High-tech dyeing and finishing (production and sales of finished fabrics) revenue was 1.2 billion, which was basically the same. Net profit was about 90 million yuan. 2022 was a loss;

Fuhua Weaving (cloth production and sales) had revenue of 660 million yuan, an increase of 33% over the same period, net profit of about 100 million yuan, and net profit of about 420,000 in 2022;

Huachang Textiles (production and sales of nylon cloth) had revenue of 220 million yuan, an increase of 70% over the same period. Net profit was about 8.34 million, which was a loss in 2022.

The company's future development goals are to actively promote the construction of Huai'an Taihua's new green multifunctional nylon material integration project, give full play to the advantages of scale, strengthen the competitive advantage of differentiated products such as nylon 66 and recycled nylon; make full use of the competitive advantages of nylon segment leaders and the advantages of the entire industry chain to comprehensively enhance core competitiveness in R&D, production, sales, etc.; strive to become a global leader in green multi-functional nylon and high-end functional fabrics with R&D and innovation as the core driving force; see 1. More practical measures to give full play to the new advantages of the project. Accelerate the self-construction of the Huai'an project, focus on putting recycling and polymerization projects into operation, promote the commissioning of automated production line equipment, and accelerate the construction of the Taihua Shanghai Innovation Research and Development Center project.

2. Better services give full play to new marketing advantages. Continue to focus on the company's main work lines and initiatives to increase the promotion of the company's strategic products PRUTAC and PRUECO in the woven field and other fields; accelerate the development of leading customers in overseas markets and domestic segments; and continue to increase the sales share of important customers.

3. Higher energy efficiency gives full play to new production advantages. With “excellent variety, improved quality, quick delivery, and cost reduction” as the main line of work to meet customer needs, we adhere to the production policy of differentiated products with good quality, fast delivery, and excellent quality and low cost of conventional products.

4. Stronger strength to give full play to new advantages in R&D. Continue to adhere to the “technology, green, and fashion” product development direction, be guided by market demand, establish “forward-looking” product development projects, continue to promote R&D products from “following” to “lead”; continue to strengthen the collection of market and customer information, closely follow sales and production cooperation, promote the iterative upgrading of differentiated products and lead market trends; and continue to strengthen contacts and communication with universities, suppliers, research institutes, etc. to support product quality improvement and new product development.

Maintain profit forecasts and give buying ratings

In 2024, the international situation was complicated. Although the domestic economy showed signs of recovery and the chemical fiber industry as a whole improved slightly, the domestic market showed a slow progress under pressure. The pressure on corporate profits was prominent, and there were many tests such as insufficient demand, shrinking orders, and rising costs. In terms of domestic sales, China's textile and garment consumer demand is still resilient. At the same time, the rich consumer circle, the continuous expansion of industrial textile application fields, and the emergence of new forms of online retail will continue to spawn new consumer demand. In terms of export sales, as the international division of labor in China's textile industry changes, the foreign trade structure for various major products in the industrial chain is being adjusted and optimized, and it is expected that the export share of chemical fiber and its products will still show a good growth trend.

We expect the company's net profit to be 5.9/72/90 million yuan in 24-26, EPS 0.66/0.81/1.01 yuan/share, respectively, and the corresponding PE is 16/13/10X, respectively.

Risk warning: risks caused by macroeconomic fluctuations; industry competition risks; management risks due to scale expansion; exchange rate risks; environmental protection risks.