\u3000\u3 Shengda Resources Co.Ltd(000603) 225 Xinfengming Group Co.Ltd(603225) )
Event: Xinfengming Group Co.Ltd(603225) released the performance announcement for the first quarter of 2022. During the reporting period, the company achieved a total operating revenue of 10.602 billion yuan, a year-on-year increase of – 1.98% and a month on month increase of + 29.29%; The gross profit was 897 million yuan, a year-on-year increase of – 11.84% and a month on month increase of + 11.39%; The year-on-year net profit was -92.2%, with a parent company ratio of -1.02%.
Comments: the main reason for the pressure on the company’s performance in the first quarter is that the rising price of upstream resource products drives the increase of product cost. At the same time, the superimposed epidemic repeatedly affects logistics and demand, resulting in poor transmission of costs to the downstream and compressing profit space. According to the company’s operating data, the prices of POY, FDY and DTY during the reporting period were + 18.65%, + 14.51% and + 13.49% year-on-year respectively; The month on month ratio was + 1.75%, + 3.52% and – 2.89% respectively. The prices of PTA and MEG of main raw materials were + 36.45% and – 0.62% year-on-year respectively, and the cost increase was higher than the product price increase, reducing the profits of enterprises. In terms of price difference, the price difference of filament industry narrowed to varying degrees in the first quarter. According to wind data, the price difference of POY, FDY and DTY industries in the first quarter was – 141 yuan / ton, – 437 yuan / ton and – 202 yuan / ton respectively year-on-year; The month on month ratio was – 318 yuan / ton, – 340 yuan / ton and – 358 yuan / ton respectively. In addition, due to the impact of the epidemic, the logistics turnover and demand side are under pressure. According to the company’s operating data, the company’s POY production and marketing rate decreased by 2.42pct year-on-year in the first quarter.
Steady expansion of production capacity, waiting for the performance elasticity after the reversal of the industry: according to the announcement, as of 2021, Q1 company has a PTA production capacity of 5 million tons, 6 million tons of polyester filament and Shanghai Pudong Development Bank Co.Ltd(600000) tons of staple fiber. In 2022, the production capacity of 1 million tons of filament and Shanghai Pudong Development Bank Co.Ltd(600000) tons of staple fiber is planned (300000 tons of FDY has been put into operation in February). By the end of the year, the company will realize the production capacity of 7 million tons of polyester filament and 1.2 million tons of polyester staple fiber. According to the announcement plan, at the end of the 14th five year plan, the company will achieve the “double 1000” goal, that is, 10 million tons of PTA and 10 million tons of filament production capacity, about twice the current production capacity, with significant growth attribute. At the same time, with the improvement of the epidemic situation, terminal consumption may recover month on month; The logistics and transportation situation may be alleviated. At present, the raw material inventory of weaving enterprises in the downstream Taicang, Changshu and Xiaoshao areas is generally not high. After the terminal recovery and the contact of transportation capacity constraints, there may be a demand for replenishment. At that time, the industry boom can be reversed.
Investment suggestion: maintaining the Buy-A investment rating, considering the rise of raw material prices in the first quarter and the low prosperity of end consumption, we will reduce the performance level of the company in 2022. It is estimated that the net profit of the company from 2022 to 2024 will be 2.356 billion yuan, 3.373 billion yuan and 4.030 billion yuan respectively.
Risk tips: the epidemic repeatedly affects the terminal demand, the crude oil price continues to rise, the project construction is less than expected, and the safety and environmental protection policy affects production.
