Spandex industry continues to improve. Since August 2020, the price of spandex 40D has risen from 28,000 yuan / ton to the current 63,000 yuan / ton, an increase of 125%. The price difference of spandex 40D has increased from 15,000 yuan / ton to about 27,000 yuan / ton, an increase of 80%. The price of spandex 20D has risen from 35,000 yuan / ton to more than 80,000 yuan / ton, an increase of 129%. The price difference of spandex 20D has increased from 22,000 yuan / ton to about 45,000 yuan / ton, an increase of 105%. Upstream cost support, strong downstream demand, spandex prices and price spreads are easy to rise and difficult to fall under the dual drive of raw material costs and demand, and it is expected that the seller's market pattern will continue in 2021. On the supply side, the domestic spandex production capacity reached 90 tons in 2020, a year-on-year growth rate of 3.5%. The supply of spandex is limited in 2021. Inventory days as low as 13 days, for nearly 4 years low demand end, since 2020 Q3, downstream textile and clothing upstream, operating rate and new machines increased significantly, leading to rapid improvement in spandex demand. With the change of consumer concept and the upgrading of consumer demand, consumers have more and more demand for sports and leisure clothing, and higher and higher requirements for clothing functions. With the significant trend of overseas economic recovery, a substantial return of overseas orders and a significant increase in exports, the future spandex demand has a steady growth rate of 6% Murray and 10%. The production capacity continues to expand in the leading position in the industry, and the company has an obvious cost advantage in spandex equipment.
From 2014 to 2020, the company continued to increase the spandex industry, and the company's spandex production capacity increased steadily from 20, 000 tons to 100000 tons (all new capacity after 2015), accounting for about 11% of the national production capacity, which firmly occupies the leading position in the spandex industry. "with an annual output of 100000 tons, the company's spandex production capacity will reach 160000 tons after the first and second phases of the high-quality ultra-fine denier spandex fiber project are put into production. The company spandex products 20D accounts for more than 30%, is the largest 20D production enterprise in China.
The price difference of 20D is significantly higher than that of 40D. As the largest spandex 20D manufacturer in China, the benefit degree is significantly higher than the industry average. The weighted average total cost of the spandex plant is at a low level in the industry, the company has strong price protection ability, and the profit has improved obviously.
The production capacity of viscose filament is the first in the world, and the cost advantage ensures the leading gross profit margin in the industry. In 2020, the national viscose filament production capacity is 200000 tons, and there are only 4 production enterprises left, of which the top three account for more than 90% of the production capacity, belonging to a significant oligopoly industry. Xinxiang chemical fiber viscose filament has a production capacity of 80,000 tons, a market share of 38%, the highest production capacity in the world, and the cost advantage helps the company to lead the gross profit industry. With the gradual improvement of the overseas epidemic situation, the company's viscose filament sales have basically returned to the pre-epidemic level. With the recovery of the global macro-economy, the price of viscose filament which is still at a low level is expected to rise.
Profit forecast and valuation: the company's income is expected to be 4.55 billion yuan, 6.4 billion yuan and 7.29 billion yuan in 2020, 2021 and 2022, and the net profit returned to the mother is 93 million yuan, 727 million yuan and 891 million yuan respectively, EPS 0.07,0.58 yuan and 0.71 yuan, PE 58.3x, 7.4x and 6.1x. Based on the 2021 earnings forecast, 15 times the PE valuation is given, with a target price of 8.7 yuan, maintaining the "buy" rating.
Risk hints: macroeconomic downturn, project production falling short of expectations, and demand falling short of expectations
