The absolute leader in the field of ultra-fine fiber synthetic materials in China
Huafeng superfiber has focused on the research and development, production and sales of superfiber materials for many years, and its main products include ultra-fine fiber bottom billet, suede leather and ultra-fine fiber synthetic leather. The company's production and marketing scale and production capacity occupy the first place in the domestic industry, and now it has become the leader of the domestic ultra-fine fiber PU synthetic leather industry. The company has experienced five times of capacity expansion since 2010 and has an annual production capacity of about 100 million meters of superfiber by 2019, accounting for about 50% of the national production capacity. In addition, the company achieved strategic restructuring with Weifutong in 2017, which is the world's leading provider of digital banking solutions, providing overall mobile payment solutions for dozens of domestic banks.
Affected by the epidemic in 2020, the start of the downstream of superfiber was seriously hindered and the demand for superfiber was weak; as the industry leader, the company was significantly affected in the first half of the year, but since the beginning of the third quarter, the demand of the downstream market has recovered rapidly, and production and sales have increased significantly compared with the second half of 2019; in addition, the subsidiary Qidong project has been completed and put into use, leading to the improvement of the performance of superfiber business in the second half of the year. The company has raised prices several times in 2021, superimposing the increase in sales brought about by downstream demand repair, which is expected to bring flexibility to short-term performance.
The performance-to-price ratio of superfiber products is obvious, and there is a wide space for substitution.
As the third generation synthetic leather with excellent properties, ultra-fiber leather can form an alternative relationship with the dermis and the first and second generation synthetic leather in most application fields. In the early stage, the price of superfiber leather is higher than that of the first and second generation synthetic leather (but lower than the price of leather), which limits its application to a certain extent, but with the expansion of industry production capacity and the improvement of technology, the price of superfiber products has declined. Gradually opened its application space.
At the same time, the environmental protection policy has also accelerated the substitution trend of ultra-fiber leather. At present, the market share of ultra-fiber leather in China is only about 6% of that of ordinary artificial leather, synthetic leather and real leather (the demand is more than 5 billion meters). The proportion is still low, and there is a broad space for development in the future.
Huafeng superfiber has a significant advantage in integration, and its foray into high value-added products lays the foundation for medium-and long-term development. The company is based on leading technology and integration advantages, supplemented by the scale effect after capacity expansion to further reduce costs and build product barriers (the company's superfiber has an absolute scale advantage among its domestic counterparts, the production capacity of other domestic competitors are all below 10 million meters, and the capacity gap is nearly 10 times). In the short term, the company's sales of superfiber products increase (fund-raising projects are gradually put into production), product price increases add raw materials, and the reduction of energy costs may provide flexibility for performance growth; in the medium to long term, with the company's entry into markets such as high-margin auto interiors, it will help it further enhance its profitability and stabilize its position in the industry.
Profit and valuation
It is estimated that the company's operating income in 2020\ 2021\ 2022 will be 32.83\ 47.54\ 5.768 billion yuan, an increase of 1.32%\ 44.81%\ 21.32% over the same period last year. The net profit is-3.62,5.78\ 726 million yuan respectively, corresponding to the PE of 17.30,13.77 times in 2021 and 2022 respectively. Considering that the company is the leader in the superfiber industry, the demand gradually recovers after the epidemic, at the same time, the company's capacity expansion and short-term price increases repeatedly, enter the high-end market in the medium and long term, give a valuation of 25 times next year, the target market value is 14.456 billion yuan, the target price is 8.25 yuan, covering for the first time. Give a "buy" investment rating.
Risk tips: major raw material price fluctuation risk, fund-raising project can not achieve the expected return risk, lack of market demand risk, environmental protection policy change risk
