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On August 9th, Cailian Press (Reporter Chen Kang) Huafon Chemical (002064.SZ), a leading company in spandex, released its mid-term report for 2024 with revenue and net profit growth. The report mentioned that the spandex and adipic acid block had capacity release compared to the same period of the previous year, and the production and sales of the main products increased compared to the same period of the previous year.

According to the financial report, Huafon Chemical achieved a total operating income of 13.744 billion yuan in the first half of the year, an increase of 8.89% year-on-year, and a net profit attributable to mothers of 1.518 billion yuan, an increase of 11.74% year-on-year.

Huafon Chemical's three main products are spandex, polyurethane raw materials, and adipic acid. The corresponding chemical fiber sector, chemical new materials sector, and basic chemical products sector had revenues of 4.653 billion yuan, 3.036 billion yuan, and 5.261 billion yuan in the first half of the year, accounting for more than 90% of the revenue.

During the reporting period, the operating income of the chemical fiber sector and the chemical new materials sector of the company both decreased by 0.11% compared to the same period last year, while the operating income of the basic chemical products sector increased by 42.38% compared to the same period last year. The gross margins of the above-mentioned sectors decreased by 0.71 percentage points, 3.52 percentage points, and 1.87 percentage points compared to the same period last year.

This means that the revenue and gross margins of spandex and polyurethane raw materials in the first half of the year have declined, while adipic acid has shown an increase in revenue despite a decline in gross margin. Huafon Chemical mentioned that in recent years, global adipic acid production capacity has maintained a growth trend, and in the future, nylon 66 and PBAT will become the biggest driving force for the consumption growth of adipic acid products.

According to third-party data such as iFinD and Huarui Information, the demand for spandex in the first half of the year increased compared to the same period last year, but the price showed a unilateral downward trend. The price of adipic acid fluctuated and fell, and the demand was weak. In addition, the high operating prices of key raw materials led to a narrowing of the price differential and further squeezed profit margins.

Under price pressure, Huafon Chemical relied on the advantages of the industrial chain to alleviate the impact of price fluctuations of purchased raw materials. The company's production of adipic acid and polyester diols can be used for both internal use and external sales. At the same time, the company is orderly promoting the construction of capacity to expand its scale advantage.

On July 21st, the company announced that part of the non-public offering and fund investment project of the 0.3 million ton/year differentiated spandex expansion project has been completed. Among them, 0.1 million tons were put into trial production last April and have now officially reached full production. The remaining 0.2 million tons are expected to be completed in 2025. In addition, the company added an investment of 0.8 billion yuan for the deepening project of the 0.12 million ton/year PTMEG spandex industrial chain, doubling its production capacity and further expanding its advantage in raw material cost.