\u3000\u3000 Zhe Jiang Taihua New Material Co.Ltd(603055) (603055)
China's Nylon industry is the leader in the whole industry chain, with significant R & D driving advantages
The company has a complete chemical fiber textile industry chain integrating R & D, spinning, weaving, dyeing and finishing and sales. It can R & D and produce a series of high-grade functional nylon fabrics such as environmental protection and health, outdoor sports and special protection. It is in the forefront of the industry in terms of production capacity, technical level and new product development capacity; It is a rare high-tech enterprise in China that can produce high-grade nylon 66-fdy products.
The performance recovered strongly after the epidemic, and the upgrading of differentiated product structure led to the growth of gross profit margin
In 2020, affected by the epidemic, the company's revenue and net profit attributable to its parent decreased, and the performance recovered strongly in 2021. The revenue of 2021q1-3 was 3.068 billion yuan (+ 83.70%), and the net profit attributable to its parent was 377 million yuan (+ 307.82%). In 2021, it is expected to realize a net profit attributable to the parent company of about 460 million yuan (+ 284%), deducting a net profit of about 435 million yuan (+ 351.65%). Among them, Q4 is expected to realize net profit attributable to the parent company of about 83 million yuan (+ 205%), deducting non net profit of 77 million yuan (+ 244%).
The upgrading of product structure drives the growth of nylon filament gross profit margin. In 2020, the company's gross profit margin was 21.79% (- 1.63pct), of which the gross profit margin of nylon filament was 21.29% (+ 1.75pct), with a significant increase. With the gradual production of differentiated products nylon 6 and nylon 66, the gross profit margin and parent net profit margin of 2021q1-3 company rebounded rapidly, which were 26.4% (+ 8.4pct) and 12.3% (+ 6.8pct) respectively.
The price of raw materials may go down, and the consumption upgrading of functional clothing will accelerate the penetration of nylon
Nylon has high abrasion resistance and moisture absorption strength, and has large application space in the downstream garment industry. Compared with other chemical fibers, nylon has outstanding characteristics in strength, wear resistance and moisture absorption. Therefore, nylon fabric has stable quality and durability. It has become the best choice in outdoor, sports and other clothing fields, and has the trend of gradually replacing polyester. However, due to price constraints, its application scope is not as wide as polyester.
The localization of raw material adiponitrile is accelerated, the performance of nylon 66 is excellent, and the price is reduced, which is expected to replace part of the demand for polyester. Nylon 66 has more advantages in color fastness and elasticity, but in the past, the price of nylon 66 chips was high, the market of raw material adiponitrile was concentrated and dependent on imports, and the development of nylon 66 was limited. In 2020, domestic technology breakthrough will accelerate the localization of adiponitrile. After the release of production capacity in the future, the price may usher in a downward trend, which will drive the price of nylon 66 to decline and reduce the price difference with polyester. Nylon 66 is expected to replace some polyester demand. The upgrading of outdoor sports consumption and the growth of functional clothing demand open up the nylon market space. Sinotrans Limited(601598) the sports market is booming. With the upgrading of consumption and the improvement of athletes' professional knowledge, higher requirements are put forward for the functionality of sportswear, yoga clothes, down jacket and women's sports underwear. Nylon 6 and nylon 66 silk are expected to meet strong demand.
Nylon industrial chain integration, strengthening coordination, accelerating production expansion and opening up long-term growth space
The company's business is distributed in the upper, middle and lower reaches of the industrial chain, from nylon spinning, nylon grey fabric manufacturing to finished fabrics. Through the advantages of integrated operation, the company strengthens synergy and improves the overall operating efficiency of the company. The production capacity of 120000 tons of differentiated nylon filament is gradually released. It is expected that the annual capacity utilization rate will be about 60% - 70% in 2021 and 100% in 2022. Invest in the new green multifunctional nylon new material integration project. Phase I 60000 tons of differentiated nylon 66 silk and 100000 tons of chemically regenerated nylon silk are expected to be put into operation in April 23, and the capacity utilization rate may reach 50% in 2023.
R & D innovation, optimize product structure and improve penetration and market share
The company gives full play to the advantages of R & D and innovation, optimizes the product structure, improves the quality of key products, widens the product field, and develops differentiated and high value-added products. Take the lead in launching differentiated nylon 66 wire, and increase the added value of light transmittance, viscosity, safety and so on. In 2020, the sales of differentiated products such as dye-free colorful brocade yarn, recycled environmental protection yarn and nylon 66 yarn increased by 68% year-on-year. The industry penetration rate of nylon products and the company's market share continued to improve.
High quality customers are working hard, with both depth and breadth
The brand has deep customer resources and is a long-term partner of decathlon, Toread Holdings Group Co.Ltd(300005) , C & A, H & M, Hla Group Corp.Ltd(600398) , Jordan, Anta and other brands. Depth and breadth go hand in hand, increase the development of new brand customers, tap the depth of existing large customer orders, and optimize the customer structure. Taking Anta as an example, the company and Anta have worked together to build a one-stop supply system from yarn to ready-made clothes. With the deepening of cooperation, Anta children and FILA under Anta have also become the company's customers.
Blue ocean of renewable nylon market, technological breakthrough and seize the market opportunity
The consumption concept of Chinese residents is changing, the consumption structure is gradually upgrading, and the pursuit of fashion, environmental protection and functional textiles has become the mainstream of consumption. In August 2021, the company joined hands with Beijing Sanlian Hope Shin-Gosentechnical Service Co.Ltd(300384) to lay out the international high-end renewable nylon track. The first 10000 ton chemical recovery regeneration nylon project with complete set of self owned technology has made a technological breakthrough to fill the technical gap in this field in China and realize the closed-loop recycling of nylon fiber reuse.
First coverage, give buy rating.
The company increased revenue with innovative products and reduced costs with conventional products, gave full play to the advantages of the whole industrial chain, actively promoted the research and development of green, functional and differentiated products, continuously optimized the product structure, strengthened market development and strengthened cost control. The company's scale and brand effect gradually appeared.
We estimate that the total operating revenue of the company from 2021 to 2023 will be 4.2 billion yuan, 5.2 billion yuan and 6.4 billion yuan respectively, with a year-on-year increase of 67%, 24% and 23%, and the net profit attributable to the parent company will be 460 million yuan, 610 million yuan and 820 million yuan respectively, with a year-on-year increase of 284%, 33% and 35%. The corresponding EPS will be 0.5, 0.7 and 1 yuan respectively, and the corresponding PE will be 29, 22 and 16x respectively. Select comparable companies, give Zhe Jiang Taihua New Material Co.Ltd(603055) 22 years, the PE is 31x, and the corresponding target price is 21.85 yuan / share.
Risk warning: risks caused by macroeconomic fluctuations; Industry competition risk; Management risks brought by scale expansion; Covid-19 epidemic impact; Exchange rate risk, etc.
