NANSHAN FASHION(300918) GF SECURITIES·2024-11-29 10:26Investment Rating - The report maintains a "Buy" rating for Nanshan Zhishang (300918 SZ) with a target price of 16 39 RMB per share based on a 20x PE multiple for 2025 [1][5] Core Views - Nanshan Zhishang is a leading domestic fine wool fabric company with rapid development in new functional chemical fiber products [1] - The company has established a dual-chain synergy system integrating wool textile apparel and new materials including a 3600-ton ultra-high molecular weight polyethylene fiber project and an 80 000-ton high-performance differentiated nylon filament project [1] - Traditional business (fine wool fabric apparel) is expected to maintain steady revenue growth with improving profitability through technical upgrades and product structure optimization [1] - The ultra-high fiber business benefits from favorable policies and expanding downstream demand with potential for increased profitability as capacity ramps up [1] - The high-performance differentiated nylon filament business is expected to contribute significantly to performance with rapid capacity release and strong downstream demand [1] Financial Projections - Revenue is projected to grow from 1 747 million RMB in 2024E to 3 452 million RMB in 2026E representing a CAGR of 30% [3] - Net profit attributable to shareholders is expected to increase from 209 million RMB in 2024E to 402 million RMB in 2026E with a CAGR of 36 3% [3] - EPS is forecasted to rise from 0 58 RMB per share in 2024E to 1 12 RMB per share in 2026E [3] Traditional Business (Wool Textile Apparel) - The company has a complete wool textile apparel industry chain with significant integrated collaboration advantages [1] - Revenue from fine wool fabric business is expected to grow steadily with profitability improving through technical upgrades and product structure optimization [1] - The export proportion to the US is small making the business less affected by trade friction risks [1] Ultra-High Fiber Business - The 3600-ton ultra-high molecular weight polyethylene fiber project is fully operational as of 2024H1 with expanding application areas [1] - Favorable policies such as the "Military Equipment Support Regulations" and export policy clarity are expected to boost sales [1] - Profitability is expected to improve as capacity ramps up and costs decrease with the Yulong Petrochemical project [1] High-Performance Differentiated Nylon Filament Business - The PA6 production line is gradually starting trial production with the PA66 line expected to begin trial production in late November 2024 [1] - The company expects annual production of 48 000 tons 64 000 tons and 80 000 tons in the first three years of operation with 30 000 tons of intentional orders covering over 60% of first-year capacity [1] Financial Performance - Revenue from fine wool fabric business reached 410 million RMB in 2024H1 accounting for 52 5% of total revenue [92] - Revenue from apparel business was 280 million RMB in 2024H1 accounting for 35 5% of total revenue [92] - New materials revenue grew significantly to 90 million RMB in 2024H1 accounting for 11 1% of total revenue [92] Regional Revenue - Domestic revenue accounted for 72 3% of total revenue in 2024H1 while international revenue accounted for 27 8% [102] - The company's export exposure to the US is minimal reducing the impact of trade friction risks [102]