Huafeng Spandex (002064): Cost advantage casts spandex leader to acquire Huafeng new material to achieve integrated extension of industrial chain

Huafeng Spandex (002064): Cost advantage casts spandex leader to acquire Huafeng new material to achieve integrated extension of industrial chain

Investment points: The largest spandex production enterprise in China has obvious advantages in scale, technology and cost.

The company currently has various spandex production capacity11.


The company’s product specifications cover 10D-2500D. At present, the spandex production is the largest in China, and the product sales cover more than 20 provinces and cities in the country, and are exported to 39 countries and regions.

The spandex industry’s increase in production capacity is nearing its end. Consumption upgrades bring increased demand, and the industry’s supply and demand are driving improvements.

The peak period of domestic spandex capacity release was in 2013-2014. From 2016, about 7 tons of old capacity has gradually been gradually withdrawn. It is expected that in 2019, the increase in capacity will be close to 10 or 6 in 2020.

5 is the lowest, and leading companies are expected to expand production, the supply side is gradually improving, and the industry concentration is gradually increasing.

On the demand side, the downstream applications of spandex are developing from a single fabric to other fields. After 2015-2018, the CAGR of domestic spandex bare yarn, spandex core-spun yarn, and spandex winding yarn were 12% and 14%.At the same time, the overall growth rate is about 7%. At the same time, through the upgrade of consumption requirements for textiles, the proportion of spandex added has increased year by year, from 3% to 5% -8%, and some high-end underwear has increased to about 10%. SpandexAs an additive in fabrics, the change in the prosperity of the knitted clothing is reduced, so we expect that the demand for spandex will maintain a growth rate of 6% -8% in the next few years.

The commissioning of 6 cutting-edge differentiated advanced spandex production capacity in Chongqing will lead the company into a new round of performance growth.

The company’s Chongqing 6 forecasts that the differentiated spandex project is expected to reach capacity in August 2019, when the company’s total capacity will reach capacity.

8 nominal.

The advantages of the Chongqing base in terms of raw materials, energy (the country’s largest shale gas field, and the group’s thermal power plant directly supplying steam), electricity, sewage treatment, and labor costs have been gradually developed. It is expected that the cost of increasing production capacity will be lower than the cost of the old Ruian plant.1500-2000 yuan / ton, it is also about 1,100-2200 yuan / ton lower than the cost of new spandex projects in Xinxiang, Luzhou Hyosung, Taihe and Ningxia.

The commissioning of the third and fourth phases of Chongqing will consolidate Huafeng’s cost advantage and the leading position in the industry. The full release of more production capacity will also bring about the flexibility of conversion performance. According to our calculations, each increase in the price of spandex will increase by 1,000 yuan / ton.Thick company net profit after tax1.

0.5 billion.

Acquired Huafeng New Materials, a subsidiary of the group, to realize the integration and extension of the industrial chain.

The company plans to acquire Huafeng New Materials, a subsidiary of the Group, by combining the issue of shares and the payment of cash, and will increase matching financing. The price of the issued shares is tentatively set at 4.

15 yuan / share.

Huafeng New Material currently has a production capacity of 42 parts of polyurethane polyurethane stock solution, 48 parts of adipic acid and 42 parts of polyester polyols. It has a number of invention patents and its own technology, and has strong research and development strength.

Huafeng New Materials achieved operating income of 106 in 2018.

6.5 billion, net profit attributable to mother 15.

250,000 yuan, total assets of 86.

7.2 billion, net assets 34.

US $ 2.8 billion. After the merger is completed, the asset size, operating income and net profit of listed companies will be significantly increased.

Investment rating: The peak period of the spandex industry’s production is about to pass, and the old capacity of domestic SMEs will continue to be eliminated. The downstream demand will benefit from the consumption upgrade and grow steadily. The supply and demand layout will help improve.

The commissioning of advanced production capacity with low marginal cost in Chongqing base will bring breakthrough performance elasticity.

At present, because the transaction price of the acquired Huafeng New Material has not been determined, and it is covered for the first time, we give an overweight rating. We still use the current spandex business and price-earnings ratio forecast and valuation standards. We expect the company’s 2018-2020 net profit attributable to the mother.

40, 5.

28, 6.

980,000 yuan, EPS is 0.

26, 0.

31, 0.

42 yuan, the corresponding PE is 25X, 21X, 15X.

Risk Warning: 1.

Spandex prices are down; 2.

Remote control for textile and apparel.


The acquisition did not go well.

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