\u3000\u3000 Xinfengming Group Co.Ltd(603225) (603225)
Event: on January 20, 2022, the company issued the announcement on the advance increase of annual performance in 2021. It is expected that the net profit attributable to the parent company in 2021 will increase by 1.55-1.75 billion yuan compared with the same period of last year, with a year-on-year increase of + 256.5% – 289.7%; In 2021, the net profit deducted from non parent company will increase by RMB 1.67-1.86 billion, with a year-on-year increase of + 419.9% – 467.6%.
The company’s 2021q4 performance is under pressure. According to the calculation, the company expects to realize a net profit attributable to the parent company of RMB 2.15-2.35 billion in 2021, with a compound growth of 5.4% – 10.2% in the two years from 2019 to 2021, mainly due to the rise of the company’s product price and the continuous and stable growth of downstream textile demand supported by the rise of raw material prices. Among them, the net profit attributable to the parent company in 2021q4 was RMB 220-420 million, lower than RMB 610 million in 2021q3, and the profit shrank month on month, mainly due to the dual control and production restriction policy in October 2021 and the impact of epidemic disturbance.
Looking forward to 2022, it is optimistic that the filament price difference will continue to rise. Affected by the correction of oil price and double control and production restriction, the filament price fell from October 2021, and the filament price difference narrowed accordingly. However, since late December 2021, affected by geopolitics and the decline of U.S. crude oil inventory, crude oil prices have stopped falling and rebounded, driving the recovery of filament price difference. Looking forward to 2022, we believe that under the support of cautious capital expenditure, limited supply and sustained recovery of demand, the price of crude oil may continue to rise, and the price of filament is expected to continue to rise; At the same time, with the gradual relaxation of overseas epidemic prevention and control and the mitigation of maritime transportation, the export demand of textile and clothing is expected to improve marginally, which will drive the recovery of filament price difference, and the profitability of the company is expected to be significantly higher than that of 2021q3-q4.
In the medium and long term, capacity expansion is expected to drive the continuous growth of performance. Capacity continues to expand, and the company’s performance is expected to continue to grow. Polyester: in the short term, according to the company’s announcement, the company is expected to have a polyester filament production capacity of 6.3 million tons and a polyester staple fiber production capacity of 600000 tons by the end of 2021, a total of 6.9 million tons, an increase of 38% over 5 million tons by the end of 2020; In the long run, the company plans to increase the filament production capacity to 10 million tons during the 14th Five Year Plan period, double that at the end of 2020. PTA: up to now, the actual PTA production capacity of the company has reached 5 million tons, and a 4 million ton PTA project has been planned. It is expected that the PTA production capacity of the company will reach 10 million tons by 2024. Based on the “two continents and two lakes” base and the goal of “two 10 million tons”, the company continues to promote the production of new production capacity, improve the market share, improve economies of scale and enhance the industry competitiveness.
Investment suggestion: considering that the company’s 2021q3-q4 performance is under pressure and is optimistic that the filament price difference will expand with the rise of crude oil price in the future, we adjust the net profit attributable to the parent company from 2021 to 2023 to 23 / 31 / 38 billion yuan, and the PE corresponding to the closing price on January 21, 2022 is 10 / 7 / 6 times. Considering the pressure on the performance of the company’s 2021q3-q4 and the disturbance of crude oil price fluctuation to the rhythm of the recovery of filament price difference, we downgraded the rating to “prudent recommendation”.
Risk warning: risk of crude oil price fluctuation; The risk of the impact of epidemic disturbance on textile and clothing demand; The risk of slow delivery of new capacity.
