STL(SZ:002648) HTSC·2025-07-14 10:37Investment Rating - The report maintains an "Overweight" rating for the company [7]. Core Views - The company has a leading cost advantage in the C2 and C3 light hydrocarbon integration layout, with significant cost advantages in ethylene production from ethane cracking. The company has established a global ethane supply chain through strategic investments in U.S. ports and VLEC fleets, positioning itself for a new growth phase with upcoming project launches in ethylene production [1][17]. - The ethylene and propylene industry is expected to see a recovery in demand, with structural contradictions in the high-end polyethylene market creating significant opportunities for domestic production to replace imports. The company is actively expanding its high-end polyethylene product offerings, which are anticipated to drive its next growth phase [3][19]. Summary by Sections Company Overview - The company has successfully integrated C2 and C3 light hydrocarbons, achieving a cost advantage over peers. The ethylene production process from ethane is notably cost-effective, and the company has built a robust global supply chain for ethane, ensuring a steady supply for its production needs [1][17]. Industry Outlook - The ethylene and propylene industry is projected to experience a recovery, with new capacity expected to come online in 2025-2026. The industry is currently facing a structural imbalance characterized by low-end oversupply and high-end shortages, particularly in high-end polyethylene products, which are heavily reliant on imports [3][19]. Financial Projections - The company forecasts net profits of 6.3 billion, 7.4 billion, and 9.2 billion RMB for 2025, 2026, and 2027 respectively, reflecting year-on-year growth rates of 3.1%, 18.4%, and 23.6%. The expected EPS for the same years is 1.86, 2.20, and 2.72 RMB per share [5][11]. Competitive Position - The company is positioned as a leader in the ethylene market, with a current capacity of 2.5 million tons and additional capacity expected to come online by 2026-2027. The strategic focus on high-end polyethylene products is anticipated to fill domestic supply gaps and enhance the company's competitive edge [3][19][23].