Huafon Spandex(002064) SINOLINK SECURITIES·2025-01-23 00:23Investment Rating - The report initiates coverage with a "Buy" rating for the company, setting a target price of 8.64 CNY based on a 16x valuation for 2025 [5]. Core Insights - The company has a significant cost advantage in spandex production, which is difficult for competitors to replicate [2]. - Despite the downturn in the spandex market, the company is expanding production to capture market share [3]. - The company plans to acquire new assets from its parent group to enhance its adipic acid production chain [4]. Company Overview - Established in December 1999 and listed in 2006, the company is the first publicly listed firm in China focused on spandex production, with a current annual capacity of 325,000 tons for spandex, 1,355,000 tons for adipic acid, and 520,000 tons for polyurethane [1]. Investment Logic - The company's spandex production cost is significantly lower than that of its peers, with a gross margin of 12.50% in 2023 compared to negative margins for competitors [2]. - The company is expanding its spandex capacity by 150,000 tons despite a market downturn, indicating a strategy to increase market share [3]. - The acquisition of TPU and polyurethane resin assets from the parent group is expected to strengthen the company's position in the adipic acid industry [4]. Financial Forecasts - Projected revenues for 2024, 2025, and 2026 are 27.855 billion CNY, 28.857 billion CNY, and 31.338 billion CNY, respectively, with year-on-year growth rates of 5.92%, 3.60%, and 8.60% [5]. - The forecasted net profit for the same years is 2.582 billion CNY, 2.686 billion CNY, and 2.979 billion CNY, with corresponding growth rates of 4.20%, 4.03%, and 10.91% [5].