Huafeng Spandex (002064) 2019 Interim Report Comment: The Spread of Narrow Spandex Spreads in Accordance with Expectations

Huafeng Spandex (002064) 2019 Interim Report Comment: The Spread of Narrow Spandex Spreads in Accordance with Expectations

On August 26th, the company released its 2019 Interim Report, which achieved 2.1 billion US dollars in operating income, a decrease of 4 per year.

75%; realize net profit attributable to shareholders of listed companies.

3.7 billion, a decrease of 4 per year.


Among them, the company achieved operating income in the second quarter of 20199.

44 trillion, a decrease of 18 from the Q1 2019.

3%; realize net profit attributable to shareholders of listed companies.

26 ppm, an increase of 13 from the Q1 2019.


  Brief comment Under the industry downturn, the company ‘s gross profit margin for spandex has remained high.

The average market prices of 2019H1MDI, PTMEG, and spandex 40D are 21,190 yuan / ton, 16,800 yuan / ton, and 32,440 yuan / ton, each -30.

3%, -10.

3%, -11.

1%; Spreads of spandex 40D, 30D, 20D are 15690 yuan / ton, 21040 yuan / ton, 22040 yuan / ton, -900 yuan / ton, -310 yuan / ton, -1145 yuan / ton.

2019H1 company spandex gross profit is 4.

96 ‰, a decrease of 0 per year.

28 成都桑拿网 ppm; spandex gross margin was 23.

77%, compared with the same period last year (23 in 2018H1).

84%) rankings were basically flat.

The company has overcome weak industry demand, rising raw material prices, intensifying market competition and other unfavorable factors. In the context of the industry downturn, the spandex gross margin has remained high.

In addition, the Chongqing subsidiary is still the company’s core profit source, and the Chongqing subsidiary’s operating income in 2019H112.

1.7 billion, accounting for 58 of Huafeng’s total spandex revenue.

0%; net profit achieved 1.

7.7 billion, accounting for 74 of total net profit.


2019H1 company selling expenses are 0.

470,000 yuan, an increase of 16 in ten years.

8%; management costs are 0.

76 ppm, a decrease of 4 per year.

48%; financial expenses are 0.

20 ppm, a reduction of 36 per year.

1%, mainly due to the decrease in interest expenses and exchange losses.

  Continue to reduce costs and increase efficiency, and new projects are steadily advancing.

In the first half of 2019, the company continued to carry out the transformation of existing multi-spinning spinning and speed up products, deepened energy conservation and consumption reduction management, and expanded technological and cost advantages; continued to promote cost reduction projects, continuously optimized product structure and profit structure, and effectively responded to market shocksCompetitive advantages have been further consolidated.

At the same time, the progress of the Ruian combined heat and power project has reached 98% and is in the trial production stage. The company will rely on the Ruian combined heat and power project to centrally supply gas, further reduce production costs, and effectively protect its competitive advantage.

As the industry leader, the company has higher bargaining power and increased production costs. The company plans to invest another 10 capacity in Chongqing and implement it in two phases. The first phase is expected to reach capacity in the second half of 2019, with an annual capacity of 60,000 tons.The project is expected to be produced in the second half of 2021, with an annual capacity of 4 options and a total project investment of 26.

US $ 300 million, an increase in actual investment by the end of the reporting period3.

4.5 billion, the project progress reached 15%.At present, the company’s production capacity accounts for about 15% of the spandex industry. After the new project is fully put into operation, the company’s market share will reach more than 20%, and the company’s spandex leader will be further consolidated.

  Integrate the Group’s high-quality assets and create a leading company in the polyurethane industry chain.

In April 2019, the company intends to acquire 100% equity of Huafeng New Materials to enter the upstream polyurethane field.

Huafeng New Material and Huafeng Spandex belong to the polyurethane industry, and both parties are leaders in their respective sub-sectors.

The output of Huafeng Spandex is the first in the country and the second in the world. The output of Huafeng new material polyurethane sole solution and adipic acid ranks first in the world.

Huafeng New Material specializes in the research and development, production and sales of polyurethane dope, polyester polyol and adipic acid. There are two production bases in Wenzhou and Chongqing. Currently, it has produced 42 polyurethane polyurethane dope, 48 adipic acid andProduction capacity of 42 free radical polyester polyols.

The domestic market share of Huafeng New Material’s polyurethane raw liquid products has reached more than 50%, with good cash flow and excellent profitability; the domestic market share of adipic acid products has reached more than 30%.

Polyurethane dope business will open up incremental markets in low-speed tires, 3D printed shoes and polyurethane curing track beds, and expand demand for adipic acid.

The project has been finalized. The project has been announced and merged with the SFC meeting. Through the restructuring and gradual progress, Huafeng Group will effectively integrate and combine the high-quality resources of the polyurethane industry chain to create a leading enterprise in the polyurethane industry chain.

  Profit forecast: Considering the consolidation of Huafeng New Materials, the company’s net profit attributable to its mother in 2019, 2020 and 2021 is expected to be 15 respectively.

5.5 billion, 19.

92 ppm and 23.

6.1 billion yuan, EPS 0.

33 yuan, 0.

43 yuan and 0.

51 yuan, PE 15X, 12X and 10X, maintaining the “overweight” rating.

  Risk Warning: Macroeconomic fluctuations and restructuring failure.