维持增持评级，下调盈利预测和目标价：因为炼化行业仍在承压，三季度长丝受高温天气产销受到一定影响，我们下调公司2024-2026年EPS 为0.98/1.11/1.54 元。结合可比公司估值给予2024 年PE15X，下调目标价为15.7 元（原为17.70 元），维持增持评级。Introduction to this report:
The company's results for the second quarter of 2024 were in line with expectations, and filament production and sales were affected by hot weather in the third quarter. Wait for downstream stocks to be replenished to drive demand to pick up.
Key points of investment:
Maintain the increase rating and lower the profit forecast and target price: Because the refining and chemical industry is still under pressure, production and sales of filament filament were affected to a certain extent by hot weather in the third quarter. We lowered the company's EPS for 2024-2026 to 0.98/1.11/1.54 yuan. Combined with comparable company valuations, the 2024 PE15X was reduced, and the target price was lowered to 15.7 yuan (originally 17.70 yuan), maintaining an increase in holdings rating.
The 2024 interim report was in line with expectations: the company achieved revenue of 48.2 billion yuan in the first half of 2024, +30.67% year over year, net profit to mother of 1.065 billion yuan, +778% year-on-year, and net profit after deducting 0.9 billion yuan, or +2800% year-on-year. The non-recurring profit and loss portion is mainly government subsidies and Jiaxing Petrochemical's palladium disposal proceeds. 2024H1 Zhejiang Petrochemical's net profit was 2.03 billion yuan, contributing 0.406 billion yuan to investment income. We expect filament to be the main contribution in the second quarter. 2024Q2's net profit to mother was 0.485 billion yuan, -18.67% year-on-year, and -16.31% month-on-month. The profit after deducting the investment income portion was approximately 0.324 billion yuan. The company's first half results were generally in line with expectations.
The price promotion policy of leading companies in the second quarter led to an improvement in price spreads: the concentration of the filament industry was high, CR6 was close to 70%, and the leaders' ability to bargain downstream increased. Since the second quarter of 2024, filament leaders have promoted the “one price” model and increased their willingness to raise prices. According to Wind data, the average price of POY/FDY/DTY in the 2024Q2 quarter was 6795/7236/8048 yuan tons, respectively, +2.58%/+0.70%/+2.71%, and the price differences were 988/1429/2241 yuan/ton, respectively, +0.87%/-7.29%/+2.27% YoY, and the price differences for each category improved month by month in the second quarter.
The recovery in refining and chemical production has led to a recovery in investment income, waiting for downstream stocks to be replenished: the company holds 20% of Zhejiang Petrochemical's shares, and the company's investment income in joint ventures and joint ventures in the first half of 2024H1 was 0.417 billion yuan, turning a loss into a profit compared to 2023H1's -0.35 billion yuan. As Zhejiang Petrochemical optimizes plant performance and enriches product structures, investment returns are expected to pick up against the backdrop of a recovery in chemical demand. Looking ahead to the second half of the year, demand for filament fell short of expectations from the third quarter of 2024 due to hot weather, and downstream loom load declined. Although price differences were maintained under the one-price model, the operating rate of upstream filament declined due to industry accumulation and weak demand. Looking ahead to the future market, we expect demand to pick up stocks at home and abroad in the winter to drive a recovery in demand.
Risk warning: the risk of project application approval, the risk of overseas geopolitical fluctuations.