Core Viewpoint - The global upgrade of disposable hygiene materials is transitioning from "internal competition" to "external expansion," with accelerated overseas manufacturing of non-woven fabrics. This trend is driven by the cross-border brand impact, industry upgrades, and localized supply barriers, presenting an opportunity for upstream non-woven fabric suppliers to reverse their current challenges. 延江股份 is one of the few companies that has completed a global supply chain layout, positioning itself to benefit from the market expansion and profit elasticity in the context of the overseas hygiene product upgrade trend [1]. Industry Logic - The global upgrade of absorbent hygiene products is accelerating the overseas manufacturing of personal care products. The domestic market has seen continuous product iteration driven by multi-brand competition and supply chain innovation, as evidenced by the evolution of Procter & Gamble's domestic products from surface materials to core components and production models [1]. - Since 2021, Chinese cross-border brands have acted as a "catalyst," reshaping the core market landscape of hygiene giants through product innovation and content e-commerce, prompting global giants to accelerate their overseas product upgrades [1]. - The current overseas hygiene product upgrade focuses on switching from spunbond non-woven fabrics (mature supply in Europe and America) to hot air non-woven fabrics, which is expected to expand the market and increase market share for upstream suppliers, indicating a potential reversal of their challenges [1]. - The estimated market space for the overseas absorbent hygiene product non-woven fabric replacement is $7.16 billion, approximately 50.1 billion RMB (based on an exchange rate of 7:1), which is more than three times the domestic market size [1]. Company Logic - 延江股份 is a leading supplier of surface materials for disposable hygiene products in China, with projected revenue of 1.485 billion RMB in 2024 (+18% year-on-year) and a net profit of 27 million RMB. The company is expected to recover from a low point in revenue and profitability after 2024, following five years of performance review [2]. - The company has a leading global production capacity and is expected to benefit from the current upgrade in hygiene products and increased overseas volume. It possesses advantages in post-processing technology, with a gross margin of 30% for 3D perforated products, significantly higher than the industry average of 10%. The company is also deeply involved in the supply chains of Procter & Gamble and Kimberly-Clark, positioning it favorably for a reversal of its challenges [2]. - Transitioning from internal competition to external expansion, the company is expected to see significant profit elasticity. Its production capacity in Egypt is ramping up quickly, with profitability significantly better than its domestic base, indicating an opening of market space and potential profit release [2]. Profit Forecast and Investment Rating - The trend of product upgrades in overseas markets is accelerating the overseas expansion of the personal care supply chain. As a leading non-woven fabric company with a completed global supply chain layout, 延江股份 is expected to benefit from this upgrade trend and achieve a reversal of its challenges. Revenue projections for the company from 2025 to 2027 are 1.8 billion, 2.2 billion, and 2.7 billion RMB, with year-on-year growth rates of 23%, 21%, and 20%, respectively. Net profits are projected to be 50 million, 130 million, and 200 million RMB, with growth rates of 95%, 146%, and 51%, respectively. The EPS is expected to be 0.16, 0.39, and 0.59 RMB, with an initial coverage rating of "Buy" [3].