CJS(SH:600176) Tianfeng Securities·2024-07-10 01:00Investment Rating - The report maintains a "Buy" rating for the company, with a target price indicating an expected return of over 20% within the next six months [6][15]. Core Views - The company is expected to see a significant recovery in profitability in Q2, with a projected net profit of 4.75 to 6.81 billion yuan, despite a year-on-year decrease of 40% to 58% [1][2]. - The decline in performance for the first half of 2024 is attributed to a high base effect from the previous year, but there are signs of recovery in both volume and price in Q2, driven by demand from sectors such as wind power, automotive, and home appliances [2][3]. - The company is positioned as a leader in the fiberglass industry, with strong cost advantages and a commitment to reducing costs and expanding capacity, particularly in high-value products like thermoplastic yarns and electronic fabrics [4][5]. Summary by Sections Financial Performance - The company expects a net profit of 8.25 to 10.32 billion yuan for the first half of 2024, a decrease of 50% to 60% year-on-year, with a non-recurring net profit of 5.08 to 6.35 billion yuan [1]. - Q2 net profit is projected to be between 4.75 and 6.81 billion yuan, with a non-recurring net profit of 3.40 to 4.67 billion yuan, reflecting a year-on-year decline of 40% to 56% [1]. Market Trends - The industry is experiencing a significant reduction in inventory, with a 30% decrease from Q1, indicating a recovery in end-user demand and improved confidence among downstream customers [3]. - The company has seen a notable increase in sales volume and price for its products in Q2, with a 20% increase in the average price of 2400tex winding direct yarn compared to the previous quarter [2]. Growth Outlook - The company is projected to achieve net profits of 27.0 billion yuan, 37.5 billion yuan, and 47.3 billion yuan for the years 2024, 2025, and 2026 respectively, indicating a positive trend in profitability [4][5]. - The report emphasizes the company's strong execution in cost reduction and capacity expansion, which is expected to enhance its competitive position in the market [4].