Huafon Spandex(SZ:002064) EBSCN·2025-08-17 13:06Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for future performance [4][6]. Core Views - The company experienced a significant decline in performance in Q2 2025, with a year-on-year revenue drop of 17.8% and a net profit decrease of 42.6% [1][2]. - Despite the current downturn in the market for spandex and adipic acid, the company is expanding its production capacity and enhancing its supply chain, which is expected to strengthen its market position in the long term [3][4]. Summary by Sections Financial Performance - In H1 2025, the company reported revenues of 12.1 billion yuan, down 11.7% year-on-year, and a net profit of 983 million yuan, down 35.2% year-on-year [1]. - Q2 2025 saw revenues of 5.8 billion yuan and a net profit of 479 million yuan, reflecting a year-on-year decline of 17.8% and 42.6%, respectively [1][2]. Market Conditions - The domestic price spread for spandex in Q2 2025 was 10,625 yuan/ton, down 1,827 yuan/ton year-on-year, indicating a supply surplus in the market [2]. - The adipic acid price spread was 2,859 yuan/ton, down 404 yuan/ton year-on-year, further highlighting the challenging market conditions [2]. Production Capacity and Strategic Initiatives - The company is a global leader in spandex, adipic acid, and polyurethane raw materials, with production capacities of 325,000 tons for spandex and 1,355,000 tons for adipic acid as of H1 2025 [3]. - Ongoing projects include an 8 billion yuan investment to expand spandex production capacity and a 50.2 billion yuan integrated natural gas project, which aims to enhance the company's supply chain and competitive edge [3]. Profitability Forecast - The profit forecasts for 2025-2027 have been adjusted downward due to the current market conditions, with expected net profits of 2.128 billion yuan in 2025, 2.621 billion yuan in 2026, and 3.242 billion yuan in 2027 [4][10]. - The report anticipates a gradual recovery in profitability, with a projected EPS of 0.43 yuan in 2025, increasing to 0.65 yuan by 2027 [4][10].