Huafon Spandex(002064) 国泰君安·2024-07-11 07:01Investment Rating - The report initiates coverage with a rating of "Buy" for Huafeng Chemical, with a target price of 9.90 CNY, compared to the current price of 6.97 CNY [1][2][6]. Core Insights - Huafeng Chemical is a leading player in the domestic spandex, adipic acid, and polyurethane raw materials industries, benefiting from the expansion of downstream elastic fabric demand. The company is expected to see significant growth in earnings per share (EPS) from 0.59 CNY in 2024 to 0.83 CNY in 2026 [2][6]. - The company currently has a spandex production capacity of 325,000 tons, which is projected to increase to 525,000 tons in the long term, along with 1,355,000 tons of adipic acid and 520,000 tons of polyurethane raw materials [2][6]. - The report highlights the company's cost advantages and integrated operations, which allow it to maintain profitability even during industry downturns. The company is also investing in projects to increase self-sufficiency in raw materials [2][6][84]. Summary by Sections Investment Recommendation - The report provides a "Buy" rating for Huafeng Chemical, with a target price of 9.90 CNY based on a price-to-earnings (PE) ratio of 16.78 and a price-to-book (PB) ratio of 1.82 for 2024 [2][6][12]. Earnings Forecast - The projected EPS for Huafeng Chemical is 0.59 CNY for 2024, 0.72 CNY for 2025, and 0.83 CNY for 2026, with expected revenues of 268.66 billion CNY in 2024, increasing to 354.17 billion CNY by 2026 [9][10][11]. Industry Overview - The spandex industry is experiencing a shift towards increased demand for elastic fabrics, with a growing trend in high spandex content clothing. The report notes that the supply side is stabilizing as the expansion cycle nears its end [2][6][27]. - Adipic acid demand is expected to rise due to the domestic production of hexamethylenediamine (HMDA) and the implementation of plastic restrictions, which will drive demand for biodegradable plastics [2][6][63][69]. Company Advantages - Huafeng Chemical has established a strong cost advantage in the spandex market, with a projected gross margin of 14.0% to 15.0% from 2024 to 2026. The company is also focusing on technological advancements and product differentiation to enhance its market position [2][6][84][91]. - The company is leveraging its integrated industrial park to enhance its supply chain efficiency and reduce costs, which is expected to further strengthen its competitive edge [2][6][84][91].