Jilin Carbon Valley (836077)
Event: the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will be RMB 300-320 million in 2021, with a year-on-year increase of 115.46% – 129.82%; In Q4, the company realized a net profit attributable to the parent company of 121-141 million yuan, an increase of 122.46% – 159.24% month on month.
China’s leading carbon fiber precursor enterprise, with booming production and sales, has driven rapid performance growth: the company focuses on the research, production and sales of carbon fiber precursor. It is a carbon fiber precursor manufacturer. Its customers include Jilin Baojing, Hengshen shares and other well-known carbon fiber enterprises in China. The company expects to realize a net profit attributable to the parent company of RMB 300-320 million in 2021, with a year-on-year increase of 115.46% – 129.82%; Among them, Q4 realized a net profit attributable to the parent company of 121-141 million yuan in a single quarter, with a month on month increase of 122.46% – 159.24%. The rapid growth of net profit was mainly due to the wide recognition of the product carbon fiber precursor in the market, strong market demand, orderly release of production capacity, continuous growth of main business income, and significant year-on-year growth of current performance.
The demand for large tow of civil products is growing rapidly, and the wet spinning of the company has technical advantages: carbon fiber has excellent characteristics such as light weight, high strength, high elastic modulus, high and low temperature resistance, corrosion resistance and fatigue resistance, which makes its downstream application broad. According to the data of 2020 global carbon fiber composite market report, the global carbon fiber demand will reach 13% CAGR in five years from 2020 to 2025, and the demand is expected to reach 200000 tons in 2025. Carbon fiber can be divided into large tow and small tow. In addition to maintaining excellent performance, large tow carbon fiber has the characteristics of relatively low cost and is widely used in the field of civil products. The company is the leader of large tow carbon fiber precursor in China, fully benefiting from the rapid growth trend of large tow demand for civil products. The company’s wet spinning technology has technical advantages in the preparation of large tow, and it is expected that the company will continue to maintain a leading position in China’s carbon fiber precursor tow.
Rapid increase of production capacity and still flexible performance: according to the data in the prospectus, by the end of 2020, the company has a production capacity of 25000 tons of carbon fiber precursor, and another 20000 tons of production capacity will be completed by the end of 2021. With the increase of production capacity, the company’s performance in 2022 may still be relatively flexible. In addition, according to the disclosure on the official website of Jilin provincial government, Jilin Chemical Fibre Co.Ltd(000420) group launched the carbon fiber precursor project with an annual output of 150000 tons in April 2021, and will add 12 precursor production lines. All of them will be completed and put into operation in December 2025. Considering that Jilin Carbon Valley is an enterprise responsible for the production of carbon fiber precursor in the Jilin Chemical Fibre Co.Ltd(000420) system, the company’s subsequent performance is still likely to grow further.
Investment suggestion: focus on the research, production and marketing of carbon fiber precursor, and become a leading enterprise of carbon fiber precursor in China. As a strategic raw material, carbon fiber can be used in military industry, aerospace, wind power, automobile and other industries. Affected by the embargo, the market is in short demand. At present, the company is in the stage of rapid release of production capacity. With the continuous production of new production capacity, the company’s performance has great flexibility. The latest market value of the company is 18.828 billion yuan, with PE (TTM) 81x. It is recommended to pay attention.
Risk warning: raw material price fluctuation, intensified industry competition, and the R & D progress is less than expected
