XfmGroup(SH:603225) ZHONGTAI SECURITIES·2024-09-04 09:00Investment Rating - The report maintains a "Buy" rating for the company with a market price of 10.59 CNY [2] Core Views - The company has shown significant year-on-year improvement in performance, with a positive outlook on demand recovery leading to an upward trend in the industry [5][6] - The company reported a revenue of 31.27 billion CNY in H1 2024, representing an 11.0% increase year-on-year, and a net profit of 600 million CNY, up 26.2% year-on-year [5][7] - The company is expected to benefit from a stable pricing model and a recovery in the long filament market, with projected net profits for 2024-2026 being 1.5 billion, 2.04 billion, and 2.57 billion CNY respectively [6][12] Financial Summary - Revenue projections for the company are as follows: 61.47 billion CNY for 2023, 63.16 billion CNY for 2024, 73.52 billion CNY for 2025, and 79.71 billion CNY for 2026, with growth rates of 21%, 3%, 16%, and 8% respectively [2][12] - The company’s net profit is projected to increase significantly from a loss of 205 million CNY in 2022 to 1.5 billion CNY in 2024, with a year-on-year growth rate of 628% [2][12] - The earnings per share (EPS) is expected to rise from -0.13 CNY in 2023 to 1.69 CNY in 2026 [2][12] - The company’s return on equity (ROE) is projected to improve from -1% in 2022 to 11% in 2026 [2][12] Market Position and Strategy - The company holds a significant market share in the polyester filament industry, with a production capacity of 7.4 million tons and a domestic market share exceeding 12% [5][6] - The company has implemented a pricing model that supports profitability, with a production and sales rate of 96.8% in H1 2024 [5][6] - The company is expanding its production capacity and product variety, including plans for differentiated filament production [5][6] Industry Outlook - The report indicates a rational expansion trend in the long filament industry, with only 95,000 tons of new capacity expected in 2024 [6] - Demand for textiles is showing signs of marginal improvement, with domestic retail sales in clothing categories showing slight growth [6] - The overall long filament market is expected to see an increase in profitability due to improved demand and stable pricing [6]