From energy storage to exertion, Shandong Nanshan Fashion Sci-Tech (300918.SZ) synergizes its dual chains to welcome fruitful results and press the "fast forward button" for the transformation of new materials.

In recent years, as China's economy and society continue to develop, outdoor sports are becoming increasingly popular, with a wave of enthusiasm gradually rising. The "China Outdoor Sports Camp Industry Development Report 2023" shows that from 2014 to 2023 (until the end of September 2023), the total fixed asset investment in national outdoor sports camps has accumulated to about 600 billion yuan over the course of ten years. The demand for outdoor sports and leisure consumption is also growing, with a surge in demand for sports and leisure products. The consumption in niche markets such as outdoor sports, yoga clothing, sunscreen clothing, and outdoor jackets remains strong, driving the demand for stronger functional nylon fibers. The textile and garment industry is entering a period of structural adjustment in product consumption. On November 28-29, Shandong Nanshan Fashion Sci-Tech, one of the few integrated woolen textile and garment industry companies globally, held the inauguration ceremony for its new 80,000-ton nylon project in Longkou, Shandong. The Deputy Mayor of Longkou City, Wang Xuejun, along with the top management team of Shenzhen New Nanshan Holding and the Chairman and General Manager of Shandong Nanshan Fashion Sci-Tech, Zhao Liang, attended the event. The event attracted over 130 participants including institutions, media, partners, and investors like CITIC SEC, CICC, Tianfeng, Haitong, GF SEC, Minsheng Securities, Ping An Asset Management, Panjing Investment, Zhuque Fund, and Haichuang Fund. During the event, investors visited the Nanshan Development Exhibition Hall, Yulong Petrochemical, Shandong Nanshan Fashion Sci-Tech's nylon filament project, and ultra-high molecular weight polyethylene project sites, showcasing the "Nanshan speed" from groundbreaking in August last year to production and operation. At the same time, from the full production of ultra-high molecular weight polyethylene fibers to the stabilization of the 80,000-ton nylon project, it further demonstrates the progress of Shandong Nanshan Fashion Sci-Tech in the platform strategic realization in the synthetic materials field. During the research activities, everyone reviewed Shandong Nanshan Fashion Sci-Tech's corporate governance, project operations, and performance achievements over the past year, as well as highlighted the company's exploration and application in new materials. They also invited Liu Shiyang, Deputy Director of the Development Department of the China Chemical Fiber Association, Professor Meng Chengzhen from Donghua University, and investors present to share information on the current situation and future prospects of the nylon industry. Shandong Nanshan Fashion Sci-Tech stated that through in-depth on-site communication, investors will gain a more comprehensive understanding of the company's value, enhance their confidence, and continue to create long-term stable returns for shareholders. Exploring high-value-added new material fibers and following the development of textile and garment raw materials At the policy level, in recent years, the national and local governments have issued a series of policies to encourage textile enterprises to develop high-performance differentiated chemical fibers, cultivate high-end textile manufacturing, and expand industrial development space. From a macro perspective, in recent years, China's nylon market consumption has shown a stable increase trend, with nylon 6 and nylon 66 consumption reaching 4.349 million tons and 524,000 tons respectively in 2023, a year-on-year increase of 7.0% and 25.2%. Among them, nylon 66 is gradually becoming the common choice for high-end yoga brands, such as the AlignTM high-waist yoga pants by the fashion empire lululemon, which are made of a fabric containing 81% nylon 66 and 19% spandex. At the same time, this fiber, which is "as thin as spider silk, as strong as steel wire, and as beautiful as silk," is rapidly popularizing at an unimaginable speed and is widely used in outdoor and sports apparel, leisurewear, underwear, home textiles, health, automobiles, military equipment, and many other fields. With the production of nylon projects, Shandong Nanshan Fashion Sci-Tech has also become the second A-share listed company, after Zhejiang Taihua New Material Group, to produce nylon 66 civilian silk. As key raw materials are rapidly being replaced by domestic production and various downstream demands are steadily developing, several listed companies have mentioned investing in the construction of nylon projects this year. "Our nylon project has at least three major advantages." Said a representative of Shandong Nanshan Fashion Sci-Tech: "The first is product variety. The varieties produced by the company in this investment mainly focus on differentiated and functional nylon 6 and nylon 66, which have strong market competitiveness; the second is reflected in quality and cost. Some nylon production lines in this investment will use the ring blowing production process to improve the stability of product quality through strict control of workshop temperature and humidity. At the same time, the fully automated production line also helps reduce production costs; The third is the most important industrial chain advantage." It is reported that Shandong Nanshan Fashion Sci-Tech has become a strategic partner with the internationally advanced German company BARMAG, investing a large amount of resources and energy in the production equipment and technology to create a nylon production line that is efficient, green, and intelligent, aiming to offer more outstanding and competitive differentiated products to the market, with higher quality rates than the industry average. Shandong Nanshan Fashion Sci-Tech's nylon 66 products, after downstream processing into nylon fabrics, are being used by international renowned companies such as BOSIDENG, LongMarchBird, and Descente. According to Huaan Research Report, the national demand for nylon 66 is expected to reach 1.32 million tons by 2025, and the national demand will reach 2.88 million tons by 2030, with an average compound growth rate of 17% from 2026 to 2030.Driven by the upgrading of consumption, the nylon industry, especially nylon 66, is expected to continue to maintain a growth trend.Vertical integration of wool spinning, strategic layout of new materials to create "the second growth curve" In the rapidly changing consumer market, some traditional clothing and apparel companies have experienced a decline in revenue and performance. Domestic textile and apparel companies are improving their product manufacturing technology and expanding their product categories to enter the high-end market, building their own "moat". Differentiated competition is particularly important, and Shandong Nanshan Fashion Sci-Tech has become a typical breakthrough development in this regard. Textile and apparel production can be subdivided into processes such as yarn spinning, weaving, and garment processing, with yarn spinning being a crucial upstream process in the textile and apparel industry. Textile fiber products directly determine the performance and quality of downstream fabrics and clothing products. With frequent government policies in place, Shandong Nanshan Fashion Sci-Tech is focusing on the textile industry and closely following market trends within its main business scope. It is actively involved in the chemical fiber spinning business, striving to build a "dual-chain synergy" development system for the wool textile and clothing industry chain and the new material industry chain, making it the company's growth engine. In 2021, Shandong Nanshan Fashion Sci-Tech began to deploy production lines related to ultra-high molecular weight polyethylene fibers, with an initial capacity of 600 tons, which started production in July 2022. The second phase with a capacity of 3000 tons started operation at the end of August 2023. Currently, Shandong Nanshan Fashion Sci-Tech's 3600 tons of ultra-high molecular weight polyethylene business is operating at full capacity, reaching a production-sales balance. The fiber products cover a range of fiber specifications from 50D to 1600D and are mainly used in downstream applications such as special protective equipment, ropes, fishing nets, aquaculture net cages, cut-resistant gloves, high-end textiles, parachutes for aerospace aircraft, and aircraft slings. Building on the success of the ultra-high molecular weight polyethylene production line, Shandong Nanshan Fashion Sci-Tech started the construction of a nylon production line in August of the previous year, completed the civil engineering work in April of this year, and held the production ceremony in November, fully reflecting the "Nanshan speed". The successful operation of the ultra-high molecular weight polyethylene and nylon projects will provide a solid guarantee for Shandong Nanshan Fashion Sci-Tech's future performance. The upgrading of the new material industry chain will also open up new growth opportunities for Shandong Nanshan Fashion Sci-Tech's performance. The nylon project is also part of the textile and apparel industry chain in which Shandong Nanshan Fashion Sci-Tech is currently involved, with good synergies in brand, market, customers, technology, and personnel. Thanks to its forward-thinking "dual-chain synergy" strategy in recent years, Shandong Nanshan Fashion Sci-Tech has seen an increase in net profit from 86 million yuan in its first year of listing in 2020 to 203 million yuan in 2023. In the first three quarters of this year, Shandong Nanshan Fashion Sci-Tech is one of the few clothing companies to achieve revenue and net profit growth. Regarding its plans in new materials, Shandong Nanshan Fashion Sci-Tech stated that following the success of the 3600-ton ultra-high fiber, the smooth progress of the 80,000-ton nylon project signifies another solid step forward for Nanshan Zhishan in the field of new materials. Looking towards the future, Shandong Nanshan Fashion Sci-Tech plans to further consolidate and expand its leading position in the new material fiber market by planning to invest in 10,000 tons of ultra-high fiber and 200,000 tons of nylon capacity. Leveraging its billion-level petrochemical project, Shandong Nanshan Fashion Sci-Tech has also reserved a variety of new types of synthetic fiber materials, aiming to create a billion-dollar scale new synthetic fiber material application platform enterprise.