Tong Kun Shares: Polyester Filament Gross Margin Bottom Shock

　　 Tong Kun shares 3Q13 performance is in line with expectations, polyester filament gross margin bottom shocks, 4Q13 capital side pressure increased, waiting for the industry to shuffle, maintain overweight rating, 3Q13 performance of the company is in line with expectations.

1-3Q13 achieved sales revenue of 16 billion 8 million yuan, an increase of 17.8% over the same period last year, and realized net profit of 102 million yuan attributable to listed companies, a decrease of 41.38% compared to the same period last year; 2Q12 net profit of 54 million yuan, an increase of 69% over the same period. 3Q13 consolidated gross profit margin of 3.75%, increased by 0.5%. 1-3Q13EPS0.11 yuan, in line with market expectations (Shen Wan chemical 2013 China Daily outlook Forecast Ltd 1-3Q13EPS0.11 yuan).

7-8 month PX price rise filament Raising prices, the industry oversupply led to no significant improvement in gross margin. In 7-8 months, the price of PX increased and the price of products in different links of the polyester industry chain increased. Among them, PX7-8 rose 4.3%, PTA increased 1.7%, polyester filament increased 3.5%, PTA-PX gross profit margin narrowed, polyester filament -PTA gross margin expanded, considering the stock price increase factor, polyester industry chain gross margin slightly expanded, we think that in the industry overcapacity problem has not been significantly improved before, polyester filament filament gross profit rate is difficult to continue to improve.

4Q13 funds face pressure will increase or speed up the capacity of the industry. The polyester filament industry has been down for 7 consecutive quarters since 1Q12, and 2Q12 and 1Q13 industries have suffered large losses. At present, most of them are small and medium-sized from the analysis of our grassroots research. Polyester filament factory The asset liability ratio and the quick ratio have been relatively dangerous. Taking the Xinmin technology company as an example, its asset liability ratio rose from 64% in 11 to 77% in 3Q13, and the quick ratio decreased from 0.78 to 0.51. If there was another suspension of procurement at the end of 12 in the early part of the year of 12, it was difficult for some silk factories to maintain normal production and operation in the early -13. If the pressure of capital surface is accelerating and the capacity of the industry is eliminated, we believe that it will benefit the long-term development of the industry and enhance the bargaining power of the leading enterprises. From the perspective of investment, we should pay more attention to the better cash flow of Tong Kun, Heng Yi and Rong Sheng.

The company's share price has already had the value of the left investment and maintained its rating. The closing price of the company in October 28th was only 5.66 yuan, corresponding to 0.8xPB. The company's excellent cost control and channel control power made it go through the industry cycle for more than 10 years without any loss. The price fluctuation of polyester filament had a great impact on the profitability of the company (the filament increased by 100 yuan and the company EPS increased by 0.12 yuan). We believe that the company's current share price has the value of left investment, and wait for the value of the company to return after the industry shuffle. To maintain earnings forecasts, the company's 13-15EPS is expected to be 0.14 yuan, 0.40 yuan, 0.56 yuan (not considering the impact of repurchase), and maintain overweight rating.