As of August 31, all 3,344 listed companies on the Shanghai and Shenzhen stock exchanges had disclosed their first half financial data. As we all know, in the A-share market, there are three listed companies whose main products include spandex, namely Huafeng Spandex, Taihe New Materials and Xinxiang Chemical Fiber. So what is the profitability of these spandex giants in the first half of the year?
According to financial data:
On July 28, Huafon Spandex released its 2017 semi-annual report. In the first half of 2017, the company achieved operating income of 1.846 billion yuan, a year-on-year increase of 50.75%; it achieved net profit attributable to shareholders of listed companies of 192 million yuan, a year-on-year increase. 146.48%, the company’s revenue and net profit achieved double growth.
On July 20, Taihe New Materials released its 2017 semi-annual report. In the first half of 2017, the company achieved operating income of 839 million yuan, a year-on-year increase of 13.49%; net profit attributable to shareholders of listed companies was 61.188 million yuan, a year-on-year increase. 81.99%, the company’s revenue and net profit achieved double growth. In the first half of 2017, Taihe New Materials benefited from the recovery of the spandex market and the growth of the aramid business. The company’s three main products went hand in hand, and its profitability rebounded significantly. Spandex products continued the upward trend since the fourth quarter of last year, and the average selling price increased to a certain extent year-on-year.
On August 11, Xinxiang Chemical Fiber released its 2017 semi-annual report. In the first half of 2017, the company achieved operating income of 1.869 billion yuan, a year-on-year increase of 11.64%; net profit attributable to shareholders of listed companies was 48.88 million yuan, a year-on-year increase of 44.65% %, the company’s revenue and net profit achieved double growth. During the reporting period, Xinxiang Chemical Fiber produced 26,544 tons of spandex fiber. The operating income of spandex fiber was 503 million yuan, the operating cost was 427 million yuan, the gross profit was 15.15%, the operating income increased by 33.98% compared with the same period last year, and the operating cost increased by 33.98% compared with the previous year. During the same period, it increased by 14.59%, and the gross profit margin increased by 14.36% compared with the same period last year.
The month-on-month increase reached 18.9%, and the spandex industry is entering a spiral upward stage
Since the second half of 2013, the price of spandex products has been showing a downward trend. For a long time, spandex companies have been in a state of loss. However, comparing the chain prices of spandex this year and next, both show an upward growth trend. Taking spandex 40D as an example, the average price in 2016 was 29,691 yuan/ton, and the average price so far in 2017 is 35,297 yuan/ton, a month-on-month increase of 18.9%. Judging from the price trend of spandex over the years, the average cycle is 3-4 years. It can be expected that the spandex industry is entering a spiral upward stage.
In addition, spandex raw materials PTMEG and MDI have also continued to support the rise in spandex yarn prices. Since 2016, MDI prices have continued to rise, with an annual increase of 91%. Entering 2017, MDI prices continue to remain high. As of July, aggregate MDI prices have increased by as much as 83.5% compared with the same period last year. The market price of PTMEG has also shown an upward trend, and the cost side of spandex companies continues to be under pressure.
It is currently the peak textile season, and gray fabrics made of spandex, such as four-way elastic, are in hot sales, further driving up the price of spandex.
Under environmental protection constraints, industry concentration has increased
In 2016, the total production capacity of the spandex industry was about 650,000 tons, and the output was about 500,000 tons, of which the production capacity below 15,000 tons accounted for 15%. In the context of fierce market competition and increasing environmental pressure, some manufacturers below 10,000 tons fell behind. Production capacity has been shut down. As the central environmental protection inspection team has successively entered Shandong, Zhejiang and other places, the spandex industry has seen large-scale production reductions and suspensions of production, and 16 companies have reduced production due to maintenance, accounting for 40% of the total production capacity. In the future, as problems such as production costs, market conditions, and environmental protection pressures continue to arise, small production capacity in the industry will be eliminated at an accelerated pace, leading companies will take advantage of the situation to seize market share, and industry concentration will be increased. Therefore, Huafeng Spandex, Taihe New Materials and Xinxiang Chemical Fiber, as leading spandex companies, achieved double growth in revenue and net profit in the first half of the year.
In the first half of the year, the industry’s operating rate was around 84%, inventory was around 29 days, and the industry was in balance between supply and demand. Against the background of increasing environmental supervision, the supply of spandex market continues to shrink, and the spandex industry is in a situation of low inventory and high operating rate. Therefore, the spandex industry chain may experience tight supply this year.
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