\u3000\u3000 Zhe Jiang Taihua New Material Co.Ltd(603055) (603055)
Company profile: a vertically integrated high-end nylon leader with continuous expansion
The company is one of the few leading enterprises in the industry that can produce civil nylon 66 and recycled filament, and has a scarce vertical integration mode of nylon filament, grey cloth and fabric. Over the past 20 years, the company has continued to expand, its financial indicators are healthy, and the release of differentiated production capacity has contributed to the high growth of performance in the first three quarters of 2021.
Industry trend: Nylon 66 and renewable fiber enter the golden period, and the leader will benefit first
From the demand side, after the localization of adiponitrile, the raw material of nylon 66, the cost is expected to decline, which is expected to accelerate the increase of civil penetration; The commitment of the head brand to use recycled materials indicates a large demand for renewable fibers. From the supply side, there are few enterprises with large-scale preparation of civil nylon 66 and renewable nylon fiber, and Taihua is a scarce enterprise with large-scale expansion prospect.
Competitiveness: the technological moat is deep, the first mover advantage is obvious, and the vertical integration reduces costs and increases efficiency
Through years of R & D investment, long-term cooperation with colleges and universities and the industry to innovate and optimize the process, and lock in the advanced equipment of international large factories in advance, the company continues to break through the development and yield optimization of various differentiated fibers, forming a high-tech moat, which has significant advantages compared with its peers. At the same time, with vertical integration, cost reduction and efficiency increase, and strong fabric development ability, we can realize the in-depth cooperation of terminal brands.
Growth: seize new opportunities, expand production significantly, and high value-added products have strong anti cycle ability
When 120000 tons of filaments are put into production, the company further plans to expand 60000 tons of PA66 and 100000 tons of recycled filaments in phase I, and the release of new production capacity will strengthen the cooperation with key customers of well-known brands. From the perspective of project feasibility analysis, it is estimated that the capacity utilization rate of the new project is 33%, that is, the profit and loss is balanced, and the debt ratio of the investment phase 1 project in extreme cases is within 55%. From the perspective of the impact of price cycle fluctuations, the performance in 2022 under pessimistic / neutral assumptions is respectively 550 / 600 million, + 18% / + 30%, relatively anti cycle.
Risk tips
\u3000\u30001. Macro environment fluctuation; 2. Declining demand; 3. Deterioration of competition pattern; 4. Price fluctuation of raw materials.
Investment suggestion: excellent competitiveness, clear production capacity layout, optimistic about the long-term growth of the leader
Nylon 66 and renewable fiber are about to enter the golden development period. The company is expected to take the lead in benefiting from the rapid layout of new production capacity by virtue of first mover advantages and deep technical barriers. At the same time, it will strengthen high-quality customer cooperation and have long-term growth potential. We have slightly lowered the profit forecast. It is estimated that the net profit from 2021 to 2023 will be RMB 460 / 6.0 / 890 million (originally RMB 460 / 6.0 / 910 million), an increase of 285% / 30% / 49% at the same time, corresponding to the slight reduction of 19-20xpe in 2023, and the reasonable valuation will be RMB 20.3-21.4.
