Hailide (002206): Differentiated Industrial Silk Leader Vietnam Project Helps Growth

Invest in a leading polyester industrial silk company, focusing on differentiated products.

Hailide’s main products include polyester industrial yarns, tire cord fabrics, light box fabrics, ceiling membranes, and stone-plastic floorings. They focus on three major areas: automotive safety, advertising materials and new materials.

The company’s polyester industrial yarn is mainly divided into two parts: automotive yarn and non-automotive yarn, of which 70% is automotive yarn.

The quality of automotive silk products is high. It takes 1-2 years of certification before it can be recognized by downstream customers. The company’s seat belt yarns, airbag yarns, and cord fabric products have entered international first-tier brand customers. The products are mainly exported.In the first half of 2019, the company’s exports accounted for about 66%.

  The market space for automotive polyester industrial yarns and polyester cord fabrics continues to grow.

Polyester fiber yarn: Based on the current nylon yarn and polyester yarn as the main raw materials, the polyester yarn has excellent overall cost performance. With TRW, Toyota and other gradually replacing polyester yarn with polyester yarn, the proportion of polyester yarn is expected to increase from 30% in 2019 to50% in 2025.

Seat belts: Overall, the demand for seat belts is proportional to the demand for car sales.

Polyester cord fabric: Through the continuous increase of the tire meridianization rate, the demand for polyester cord fabrics has increased, and the certification barriers for downstream customers of the cord fabrics have risen. The company’s cord fabric products have entered the world’s first-class brand customers, and the upstream and downstream customers account for 78.

7%.

  The Vietnam project pushed the company’s development to a higher level.

In May 2018, the company planned to invest and establish a subsidiary in Fudong Industrial Zone, Vietnam to implement an annual production of 11-inserted polyester industrial filament project.

Compared with domestic names, Vietnamese factories have significant advantages in terms of labor costs, infrastructure costs, etc .; and Vietnamese factories enjoy the “2 exemption, 4 halving” discount.

The construction of the company’s Vietnam factory is progressing smoothly and it is expected to be put into production in the second quarter of 20201.

2 Cobalt fiber yarn, put into production in the fourth quarter of 2020 4.

5 Initial high-mold, low-shrink yarn, and gradually put into production other capacity in 2021.

  Profit forecast and investment recommendations are affected by the trade friction and the downturn of the automotive industry. In the first three quarters of 2019, the company achieved operating income of 29.

9.2 billion, a year-on-year increase of 12%, and net profit attributable to mothers2.

4.3 billion, 16% above 南京夜网论坛 the effective interest rate.

The company is a domestic differentiated polyester industrial silk leader. After experiencing the test of the operating environment of the previous two years, the industry has gradually become more stable, and the company’s profits have gradually repaired. The commissioning of Vietnamese projects in the future will bring the company’s performance to a new level.Net profit attributable to mothers in 2020 and 2021.

1.8 billion, 3.

7.2 billion, 4.

86 ppm; EPS is 0.

26 yuan, 0.

3 yuan and 0.

4 yuan.

We give the company 17 times PE in 2020 with a target price of 5.

1 Yuan.

Covered for the first time, giving “overweight” rating.

  Risks suggest that the project construction and commissioning progress in Vietnam is lower than expected; the prices of raw materials have risen sharply; and demand has fallen short of expectations.