Huafon Spandex(SZ:002064)2024-08-20 02:41Investment Rating - The report maintains an "Accumulate" rating for the company [2][9]. Core Views - The company is transitioning from a focus on spandex to becoming a polyurethane platform enterprise, with a strong emphasis on scale and cost advantages. It aims to achieve global leadership in its three main business areas by 2025 [6][19]. - The demand for spandex is expected to grow significantly, driven by an increase in consumption and application range, with a projected annual growth rate exceeding 15% [6][41]. - The company has a competitive edge in adipic acid production, with a capacity of 1.355 million tons per year, leading the global market and maintaining a domestic market share of approximately 45% [6][29]. Summary by Sections 1. Company Overview - Huafeng Chemical, established in December 1999, is a leading enterprise in spandex and adipic acid, having undergone significant asset restructuring in 2019 to enhance its market position [19][20]. 2. Spandex Business - The company has a spandex production capacity of 325,000 tons per year, with plans to expand to 500,000 tons, positioning it as a global leader [29]. - The spandex market is expected to recover as the supply-demand balance improves, with the company maintaining a cost advantage of approximately 3,000 RMB per ton over competitors [6][11]. 3. Adipic Acid Business - The company’s adipic acid production capacity is the largest globally, with a focus on cost reduction through self-developed catalysts and internal procurement strategies [6][29]. - Future demand for adipic acid is projected to grow at 13%, supported by the expansion of PA66 and PBAT production [6][11]. 4. Financial Performance and Forecast - The company’s revenue for 2024 is projected at 27.4 billion RMB, with a net profit of 3.05 billion RMB, reflecting a year-on-year growth of 23% [7][8]. - The estimated earnings per share (EPS) for 2024-2026 are 0.61, 0.77, and 0.96 RMB, respectively, with a corresponding price-to-earnings (PE) ratio of 12X, 9X, and 7X [7][9]. 5. Market Dynamics - The spandex market is characterized by a high concentration of leading firms, with the top five companies holding an 80% market share, indicating a potential for recovery as production capacity stabilizes [11][12]. - The company is well-positioned to benefit from the increasing demand for high-performance textiles, particularly in the sportswear segment, which is expected to grow significantly [41][46].