\u3000\u3000 Huafon Chemical Co.Ltd(002064) (002064)
Event: the company released the performance forecast for 2021. In the 21st year, the company expects to realize the net profit attributable to the parent company of 7.85-8.1 billion yuan, a year-on-year increase of 244% – 255%, and the net profit deducted from the non attributable to the parent company of 7.7-8 billion yuan, a year-on-year increase of 253% – 264%. Among them, Q4 is expected to realize a net profit attributable to the parent company of RMB 1.72-1.97 billion in a single quarter, with a year-on-year change of + 66% ~ + 90% and a month on month change of – 24.3% ~ – 13.3%.
Comments:
The price and price difference of spandex increased, and the performance of the company increased significantly year-on-year in 21 years: with the further recovery of the global economy and the recovery of downstream demand of the industry, the sales volume of the company’s main products increased significantly year-on-year in 21 years. At the same time, affected by the lack of production capacity caused by the epidemic abroad, the supply of chemical fiber products is tight, and the price of spandex has risen sharply. The average annual prices of spandex 40d, adipic acid and sole stock solution in 21 years were 66977 yuan / ton, 10765 yuan / ton and 18740 yuan / ton respectively, with a year-on-year increase of + 117%, + 57% and + 20% respectively; The price differences of spandex 40d, adipic acid and sole stock solution were 23007 yuan / ton, 4163 yuan / ton and 6985 yuan / ton respectively, with a year-on-year increase of + 5110 yuan / ton, + 930 yuan / ton and + 240 yuan / ton respectively. Driven by the recovery of demand in the downstream textile and clothing industry, the prices and price differences of spandex 40d, adipic acid and sole stock solution increased year-on-year, and spandex 40d increased significantly, driving the company’s performance in 21 years to increase significantly year-on-year.
The spandex industry maintains a high boom, and the company steadily promotes the expansion project of differentiated spandex: with the improvement of the national economic level and the change of consumption concept, the demand for differentiated fabrics increases, and it is expected that there will be a broad market space in the future. The company makes full use of its scale, cost, technology and R & D advantages, grasps the market dynamics, improves the proportion of differentiated products with high added value, and steadily promotes the expansion project of differentiated spandex with an annual output of 300000 tons. It is expected that the 50000 ton expansion project in phase I will be put into operation in December 2022 and the 250000 ton expansion project in phase II will be put into operation in February 2025. After the project is put into operation, the company’s spandex production capacity will be further improved, which is conducive to coping with the growing demand of the downstream market, improving the company’s market share and competitiveness, and stabilizing its leading position in the industry.
The downstream nylon 66 industry is expected to accelerate its development and drive a substantial increase in the demand for adipic acid: adipic acid is an important raw material of nylon 66, and nylon 66 can be prepared by polycondensation of adipic acid and hexanediamine produced by hydrogenation of adiponitrile. The adiponitrile project of Tianchen Qixiang under China National Chemical Engineering Co.Ltd(601117) has entered the trial production stage in January 22, and the design capacity of phase I of the project is 200000 tons. The promotion of the project is expected to accelerate the development of China’s Nylon 66 industry. In order to maintain its competitive advantage in the nylon 66 industry, overseas giants have made frequent moves. BASF announced on January 17 that it would expand the production capacity of hexanediamine and nylon 66. NVIDIA and Shanghai Jieda signed a nylon 66 polymerization technology license agreement on January 19. The company is the leader of adipic acid industry. At present, it has an adipic acid production capacity of 735000 tons and a production capacity under construction of 255000 tons. In the future, the nylon 66 industry will accelerate its development, which is expected to drive the growth of adipic acid demand, and the company’s performance is expected to be greatly improved.
Profit forecast, valuation and rating: considering the continuous prosperity of spandex industry, the downstream nylon 66 industry is expected to accelerate development and drive the increase of adipic acid demand, we raised the profit forecast for 21-23 years. It is estimated that the company’s net profit from 2021 to 2023 will be 79.66 (up 7%) / 82.10 (up 7%) / 88.50 (up 2%) billion yuan respectively, and the corresponding EPS will be 1.72/1.77/1.91 yuan respectively, Maintain the “buy” rating.
Risk warning: the construction of new capacity is less than expected, the price fluctuation of raw materials is less than expected, and the downstream demand is less than expected
