Elite Color(SZ:002998) Changjiang Securities·2024-06-24 02:01Investment Rating - The report assigns a "Buy" rating for the company, marking its initial coverage [10][20]. Core Insights - The company has been deeply engaged in the polyester short fiber industry for twenty years, focusing on the research, production, and sales of polyester fibers. It has developed a range of green fiber products, including recycled polyester short fibers and low-melting-point fibers, and was recognized as a national "Green Factory" by the end of 2023. The company aims to enhance its core competitiveness through low-cost and differentiated strategies, with plans to expand production capacity for low-melting-point and recycled fibers to meet growing downstream demand [2][12]. Summary by Sections Company Overview - The company specializes in differentiated development within the polyester short fiber sector, emphasizing "green and circular" growth [10][12]. Market Demand - Low-melting-point fibers are increasingly used in automotive manufacturing due to their excellent thermal bonding properties, which allow them to replace traditional chemical adhesives. The unique advantages of low-melting-point fibers are expected to enhance their market penetration as the downstream application market recovers [11][59]. Production Capacity - The company ranks second in the industry for both low-melting-point polyester short fibers and recycled colored polyester short fibers, showcasing its scale advantages. The production capacity for low-melting-point polyester short fibers has been steadily increasing, with significant growth projected in the coming years [12][46]. Financial Performance - The company achieved a net profit of 137 million yuan in 2023, representing a year-on-year increase of 76.58%. The total expense ratio decreased from a historical high of 9.53% in 2017 to 4.92% in 2023, indicating improved cost control and profitability [50][51]. Future Growth Potential - The company anticipates substantial growth in net profit, projecting figures of 150 million yuan, 200 million yuan, and 280 million yuan for 2024, 2025, and 2026, respectively. This growth corresponds to a price-to-earnings ratio of 12.3X, 9.4X, and 6.6X based on the closing price on June 22, 2024 [20][21].