Huafon Spandex(SZ:002064)2022-12-06 08:32Market Outlook - The spandex industry is currently in a downturn with excess capacity and strict environmental regulations leading to a necessary industry reshuffle [2] - The price rebound for spandex is unlikely due to the current oversupply situation and weak downstream demand [2] Production Capacity and Differentiation - The company plans to expand its advanced production capacity despite the industry’s overcapacity, aiming to enhance market share and competitiveness [3] - The company has developed differentiated products, but the overall differentiation rate remains low, which is a key focus for future development [3] Cost Management - The company benefits from a strong cost control capability, attributed to raw material price advantages and efficient management practices [4] - The main raw materials, PTMG and MDI, account for approximately 70% of production costs, with recent price increases expected to impact costs significantly [4] Market Share and Inventory - The company currently holds about 20% of the domestic market share in the spandex industry, which is fragmented [4] - The company operates at full capacity with an inventory level of around 30 days [4] Future Plans - The company is in the process of establishing a new thermal power project to mitigate the impact of the coal-to-gas policy on production costs [3] - The location and funding for the planned new production capacity of 60,000 tons are yet to be determined [3] Financial Performance - The company’s investment in Wenzhou Minsheng Bank is performing well, with normal operations and profitability reported [5]