Huafon Spandex(002064) Great Wall Securities·2024-11-01 02:48Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected stock price increase of over 15% relative to the industry index within the next six months [18]. Core Views - The company's profitability is under short-term pressure due to a decline in the price spread of its main product, adipic acid. However, the report expresses optimism about the resilience of the leading company's profitability as the price spread stabilizes and recovers [2][4]. - The company is expected to achieve revenue growth in the coming years, with projected revenues of 28.30 billion, 32.98 billion, and 35.84 billion yuan for 2024, 2025, and 2026 respectively [1][9]. Financial Performance Summary - For the first three quarters of 2024, the company reported a revenue of 20.37 billion yuan, a year-on-year increase of 3.51%, and a net profit of 2.02 billion yuan, up 4.46% year-on-year. However, the third quarter saw a revenue decline of 6.11% year-on-year and a net profit decrease of 12.88% year-on-year [1][2]. - The overall gross margin for the first three quarters of 2024 was 15.60%, down 0.73 percentage points from the previous year. The net profit margin improved slightly to 9.91%, an increase of 0.10 percentage points year-on-year [2][3]. - The company’s operating cash flow for the first three quarters of 2024 increased by 122.87% year-on-year, primarily due to higher cash receipts from sales [3]. Product Price Trends - The prices of spandex and adipic acid have been on a downward trend, with spandex 40D and adipic acid prices decreasing by 3.57% and 16.58% respectively in the third quarter of 2024. This price decline is attributed to increased supply and weak demand [4][7]. - The report anticipates that the price spread for spandex will remain stable in the fourth quarter of 2024, while the price spread for adipic acid is expected to bottom out and recover, potentially improving the company's profitability [4][9]. Strategic Developments - The company is deepening its industrial chain integration by investing 800 million yuan to expand its PTMEG production capacity, which is a key raw material for spandex. This expansion aims to enhance the stability of raw material supply and strengthen competitive advantages [8]. - The company is also planning to acquire 100% equity in two subsidiaries, which is expected to provide new growth points for performance [9]. Future Projections - The company is projected to achieve revenues of 28.30 billion, 32.98 billion, and 35.84 billion yuan for 2024, 2025, and 2026 respectively, with corresponding net profits of 2.73 billion, 3.55 billion, and 3.93 billion yuan [1][9]. - The report highlights the potential for recovery in the spandex sector as industry consolidation occurs, benefiting the company due to its cost and scale advantages [9].