CJS(600176) Orient Securities·2024-10-23 09:38Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 12.54 CNY based on a 22X PE for 2024 [2][4][5]. Core Views - The glass fiber industry is currently under pressure, but there is an expectation for a turning point as GDP growth and industrial output show signs of improvement [1]. - The company has experienced a decline in revenue and profit due to falling glass fiber prices, despite an increase in production and sales volume [1]. - The company is expected to benefit from an optimized product structure and a potential reduction in competition from smaller firms, which may help stabilize prices [1]. - The company continues to enhance its cost and capacity advantages, particularly in high-end products, which may improve its resilience against industry cycles [1]. Summary by Sections Industry Overview - The glass fiber industry is facing a downturn, with supply exceeding demand leading to price declines. However, improvements in economic indicators suggest a potential recovery [1]. Financial Performance - In the first half of 2024, the company reported revenue of 7.7 billion CNY, a decrease of 1.2% year-on-year, and a net profit of 960 million CNY, down 53.4% year-on-year. The gross profit margin fell to 21.5%, down 7.9 percentage points [1]. - Sales of glass fiber products reached 1.52 million tons, up 22.6% year-on-year, while sales of electronic fabrics increased by 12.5% [1]. Earnings Forecast - The earnings per share (EPS) forecast for 2024-2026 has been revised down to 0.57 CNY, 0.69 CNY, and 0.84 CNY, respectively, reflecting the ongoing challenges in the glass fiber market [2][5]. - The report anticipates a gradual recovery in the industry, with projected revenue growth of 11.4% in 2025 and 7.2% in 2026 [3]. Valuation - The report employs a historical valuation method, referencing the previous cycle's bottom in 2020, to arrive at a reasonable valuation for the company [5].