CNCEC(SH:601117) GOLDEN SUN SECURITIES·2024-08-08 09:31Investment Rating - The report maintains a "Buy" rating for the company [3]. Core Insights - The successful breakthrough of the adiponitrile project is expected to accelerate the domestic development of nylon 66, which has been historically dominated by foreign technology [1][18]. - The supply structure shows that the top three global producers account for over 80% of the market, with significant domestic capacity planned but uncertain release schedules [19][20]. - Demand analysis indicates that the acceleration of adiponitrile localization and cost reductions will broaden the applications of PA66, particularly in automotive lightweighting and synthetic fibers [22][28]. Summary by Sections 1. Adiponitrile Project Breakthrough - The adiponitrile project has successfully overcome key technological barriers, enabling the domestic production of nylon 66, which is widely used in various industries [1][18]. - The project is part of a larger initiative to establish a nylon 66 new materials base in Shandong, with an initial capacity of 200,000 tons [1][18]. 2. Supply Structure - As of the end of 2023, global adiponitrile production capacity is concentrated among six companies, with a total capacity of 2.36 million tons, where major players like Invista, BASF, and Ascend account for over 80% [19][20]. - Domestic production is ramping up, with 400,000 tons planned, but the actual release of this capacity may face technical challenges [19][20]. 3. Demand Analysis - The overall consumption of nylon 66 in China is stable, with 650,000 tons expected in 2023, reflecting a 20% year-on-year increase due to the acceleration of adiponitrile localization [22][26]. - The automotive sector is a significant driver for nylon 66, with its lightweight properties making it a suitable alternative to traditional metals, especially as the penetration of new energy vehicles increases [28][31]. 4. Progress of the Company’s Adiponitrile Project - The company’s adiponitrile project is progressing well, currently operating at 45% capacity, with plans for further expansion [1][4]. - The project is expected to contribute significant profits upon reaching full capacity, with estimated profits of 690 million and 1.72 billion yuan for the first and second phases, respectively [1][4]. 5. Investment Recommendations - The company is currently trading at a historical low valuation, with a PE ratio of 7.93 and a PB ratio of 0.76, indicating potential for price appreciation [1][3]. - Forecasted net profits for 2024-2026 are expected to grow by 10%, 15%, and 17%, respectively, suggesting a positive outlook for the company’s financial performance [1][2].