\u3000\u3000 Huafon Chemical Co.Ltd(002064) (002064)
Event: the company announced the performance forecast for 2021. It is expected to realize the net profit attributable to the parent company of 7.85-8.1 billion yuan in 2021, with a year-on-year increase of 244.43% – 255.40%. The net profit after deduction was 7.746-7.996 billion yuan, a year-on-year increase of 253.02% – 264.41%. Among them, the net profit in the fourth quarter was 1.723-1.973 billion yuan, a year-on-year increase of 65.99% – 90.08%, and a month on month decrease of 24.30% – 13.31%.
The boom of main products boosted the performance, and the boom of spandex fell in the fourth quarter. The company’s main products include spandex, adipic acid and polyurethane sole stock solution, and the three businesses are among the world leaders. Since the second half of 2020, due to the demand growth brought by the global economic recovery and the demand in epidemic prevention and other fields, the production and sales of spandex have been booming, and the industry boom has increased significantly. In addition, the prices of adipic acid and polyurethane stock solution also increased significantly. In 2021, the average prices of spandex 40d, adipic acid and polyurethane stock solution were 67356 yuan / ton, 10854.4 yuan / ton and 18740 yuan / ton respectively, with a year-on-year increase of 121.95%, 58.10% and 20%, and the product profit also increased significantly. The boom of main products promoted the substantial growth of annual performance. Since the second half of 2021, due to factors such as power and production restrictions brought about by the dual control policy of energy consumption, the downstream demand of spandex has declined, superimposed some new production capacity and put into operation, and the boom of spandex industry has declined, resulting in the month on month decline of performance in the fourth quarter.
The long-term prospect of spandex industry is promising, and the company actively expands production and improves market share. Due to the characteristics of high elasticity of Spandex Products, with the improvement of national economy and consumption level, its demand has maintained rapid growth, and the long-term prospect of the industry is good. The company actively promotes the 300000 ton differentiated spandex production expansion project through fixed increase. At present, as the leader of spandex industry, the company has great cost and scale advantages in the industry. With the production of differentiated spandex expansion project, the company’s market share is expected to be further improved and its leading advantage will continue to be consolidated.
The downstream demand for adipic acid is strong, and the boom is expected to continue to rise. Adipic acid downstream is mainly used in the field of nylon 66 and polyurethane. In the past, due to the bottleneck of adiponitrile supply, the development of nylon 66 industry in China was relatively slow. With the breakthrough of domestic adiponitrile technology, Chinese enterprises and foreign countries have built adiponitrile projects in China. In the future, China’s Nylon 66 industry is expected to usher in rapid development, so as to stimulate the demand for adipic acid. In addition, adipic acid is used in the production of degradable plastic PBAT. With the implementation of plastic restriction order and the needs of energy conservation and emission reduction, the development prospect of degradability is broad. Chinese enterprises have invested in PBAT projects to further stimulate the demand for adipic acid. On the supply side, due to the characteristics of high energy consumption and high pollution of adipic acid, new adipic acid projects will face greater approval energy in the future, and the new production capacity is expected to be limited. Since the fourth quarter, the price of adipic acid has continued to rise. At present, the price and profit are at a high level in recent years. At present, the company has a production capacity of 750000 tons and will expand to 950000 tons in the future, which is expected to fully benefit from the upward trend of the industry boom.
Profit forecast and investment suggestions: it is estimated that the company’s EPS in 2021 and 2022 will be 1.71 yuan and 1.64 yuan. Calculated by the closing price of 9.92 yuan on January 26, PE will be 5.67 times and 5.93 times respectively. The valuation of the company is low, and the investment rating of “buy” is given to the company in combination with the industry status and development prospect of the company.
Risk tip: the product price has fallen sharply, and the progress of new projects is lower than expected
