NBOND(SH:603238) Shenwan Hongyuan Securities·2025-06-04 08:01Investment Rating - The report assigns a "Buy" rating for the company, Nobon Co., Ltd. (603238), marking its first coverage [2][8]. Core Insights - Nobon Co., Ltd. is positioned as a global leader in high-end differentiated water-jet non-woven materials, benefiting from the expanding and upgrading demand in the personal care and household cleaning market in China, alongside a golden window for new downstream products like oral tobacco [8]. - The company is expected to achieve a compound annual growth rate (CAGR) of +26% in net profit from 2025 to 2027, with projected net profits of 130 million, 157 million, and 189 million yuan respectively [6][8]. Summary by Sections 1. Company Overview - Nobon Co., Ltd. has over 20 years of experience in the water-jet non-woven fabric sector, establishing a comprehensive industrial chain that includes raw materials, products, and branding [7][17]. - The company has developed innovative products such as the "Sanlyzox" biodegradable water-jet material, becoming one of the few global companies to achieve mass production of such materials [7][24]. 2. Financial Performance and Profitability - The company is entering a phase of profitability recovery, with expected revenues of 2.24 billion yuan in 2024, a year-on-year increase of 17%, and a net profit of 95 million yuan, up 15% [6][38]. - In Q1 2025, revenues are projected to grow by 39% year-on-year, indicating a strong upward trend [6][39]. 3. Market Dynamics - The non-woven fabric market in China is experiencing a rebalancing of supply and demand, with a narrowing gap in production and consumption, leading to improved profitability for leading companies [7][70]. - The demand for non-woven products is expected to grow significantly, driven by increased hygiene awareness post-pandemic and diverse consumer needs [74]. 4. New Product Opportunities - The oral tobacco market is anticipated to see explosive growth, with the demand for high-end non-woven materials for nicotine pouches expected to rise, providing additional profit elasticity for the company [8][20]. - Nobon Co., Ltd. is well-positioned to capitalize on this trend without significant capacity constraints, as the material usage per product is minimal [8][20]. 5. Investment Analysis - The report forecasts a target market capitalization of 3.9 billion yuan for the company, representing a 37% upside from its market value as of June 3, 2025 [8]. - The company is expected to maintain a strong cash flow and improve its dividend payout ratio, reflecting its robust financial health [62].