\u3000\u3000 Zhe Jiang Taihua New Material Co.Ltd(603055) (603055)
The company released the performance forecast for 2021. It is expected to realize a net profit attributable to the parent company of about 460 million yuan (+ 284%), and a net profit attributable to the parent company of 435 million yuan (+ 351.65%) after deduction. Among them, Q4 realized a net profit attributable to the parent company of about 83 million yuan (+ 205%), and a net profit attributable to the parent company of 77 million yuan (+ 244%) after deduction.
Differentiated new production capacity drives high performance growth. During the period, the company's annual income and profitability increased significantly with the gradual large-scale production of 120000 tons of differentiated nylon filament. However, with full orders and production capacity, Q4's performance declined slightly compared with Q3, mainly due to: 1) Q4 was off-season in previous years (Q4 performance in 2018-2020 was less than 30 million); 2) In 2021, the profit increased significantly, and the bonus is expected to increase significantly year-on-year; At the same time, the company's optimization of inventory structure and disposal of some non-performing assets also affect the current profit.
In 2022, young people will enter the battle, and the improvement of capacity utilization and good product rate is expected to drive better growth of revenue and performance. The production capacity of 120000 tons of differentiated nylon filament put into operation in 2021 is gradually released, and the annual capacity utilization rate is expected to be about 60% - 70%, which is expected to contribute to the whole year in 2022. At the same time, with the continuous improvement of the company's process, the yield of high-end nylon 66 is better than expected, which is expected to be about 70% by the end of 2021 and 75% by 2022.
New projects are progressing smoothly, opening up space for long-term growth. The construction started on January 8, and the equipment order landed on January 12. According to the research, considering the construction period of about one year, the first batch of 60000 tons of high-end differentiated nylon 66 civil silk and 20000 tons of chemically regenerated nylon silk in phase I of the new project are expected to be put into operation successively in 2023q1, and the capacity utilization rate of that year may reach 50%. Terminal sports and outdoor brand customers have an urgent demand for PA66 differentiated silk and renewable nylon silk. After being put into operation, the growth of the company is expected to further accelerate.
The trend of high-end industry and domestic substitution is prominent, and the company's advanced layout and first mover advantage are prominent. 1. Nylon 66 is expected to accelerate penetration: all properties of nylon are better than polyester, showing a trend of gradually replacing polyester in the downstream civil textile field, especially for sportswear with high requirements for fabric functionality. Meanwhile, in the future, under the localization and mass production of raw material adiponitrile, the permeability of nylon 66 is expected to increase with the decline of raw material price in 2023, so as to accelerate the replacement of nylon 6 and polyester. 2. The blue ocean of renewable market is becoming more and more obvious: China's environmental protection policies are overweight, and clothing brands have an urgent demand for renewable energy. In terms of nylon, the global renewable nylon industrialization is still on the eve of the outbreak. The company has laid out the above fields. It is one of the few enterprises in China that can produce high-end nylon 66 civil silk on a large scale. At the same time, it is also one of the few enterprises in the world with the renewable capacity of chemical nylon, with obvious first mover advantage.
Investment suggestion: the company is a leader in the integration of China's Nylon industrial chain. By focusing on the research and development of differentiated nylon silk and continuously improving the added value of products, it is expected to fully benefit from the high boom of the sports industry and the decline of raw material prices, which will drive the improvement of nylon application penetration in the downstream. At the same time, the company also has a first mover advantage in regenerated nylon, and is expected to enjoy the high prosperity dividend of the industry in the future. Considering the large initial investment of the new project, it is estimated that the net profit of the company from 2021 to 2023 will reach 461 / 603 / 1005 million yuan (formerly 492 / 640 / 1074 million yuan), an increase of 285% / 31% / 67% respectively, corresponding to the current stock price valuation of 27 / 21 / 12x, maintaining the "buy" rating.
Risk tip: capacity expansion is less than expected; The price of raw materials fluctuates greatly; Low expectation of raw material localization process; Downstream demand is lower than expected; The public materials used in the research report may have the risk of information lag or untimely update.
