Guoxin Securities: Huafeng Spandex &Nbsp; Spandex Price Rises Into Fast Lane.

Matter:

After the Spring Festival,

Comments are as follows:

Supply and demand promotion

The revival of domestic textile and garment industry and the growth of spandex export have jointly promoted the demand growth. Even in the traditional off-season, the booming demand has made spandex manufacturers continue to maintain high opening rate and low inventory.

The relative rigidity of demand has led textile and apparel to take the lead in the process of economic recovery. Textile and clothing exports have also improved significantly, stimulating the growth of textile and garment production and driving the demand for spandex.

The financial crisis has led foreign customers to significantly reduce spandex procurement in the second half of 08. But in April 09, the demand for international markets began to recover gradually, and the cumulative demand began to release. International customers entered the market to buy spandex, which promoted the export of spandex in China in April, and began to grow gradually, reaching a record high in April.

In 2010, spandex's new capacity was relatively small, and its capacity growth rate was about 5%. The recovery of exports will promote the growth of spandex demand, and the growth rate of spandex downstream demand is expected to be over 18%.

Capacity growth is slower than demand growth. The spandex industry cycle is upwards.

Since November 09, the price of spandex has continued to rise. Following the price of 40D rose by 1000 yuan to 48000 yuan / ton in the end of 09 years in November, the spandex industry conference in January 12th of 10 years increased the price of 40D spandex price from 3000 yuan to 51000 yuan / ton.

After the Spring Festival, the price of spandex enterprises generally increased by 3000-5000 yuan / ton, and the mainstream manufacturer 40D spandex price quoted at 54000-57000 yuan / ton.

Huafeng spandex average price of 40D spandex in January is about 50000 yuan / ton. After the Spring Festival, the spandex price of 40D has risen to 53000 yuan / ton, and the price of spandex 20D has also risen from 70000 yuan / ton to 73000 yuan / ton.

Yantai spandex 40D spandex paction price also rose from 51000 yuan / ton before the festival to 54000 yuan / ton, the new contract quotation has risen to 56000 yuan / ton.

The price of spandex rose after the Spring Festival, the biggest increase in the past 09 years, and from time to time, the price increase time is more intensive, and the price interval is shorter.

We believe that spandex prices have broken through the inflection point of accelerated growth, and spandex prices have entered the fast lane.

We expect that the price of spandex will continue to rise in the near future. It is estimated that by the middle of March, the price of 40D spandex will rise to 58000-60000 yuan / ton, and the price of spandex will go up to May.

We expect that the average price of 40D spandex will reach 60000 yuan / ton in 10 years.

Industry leaders benefit from improving the spandex industry, developing differentiated products and improving profitability.

Huafeng spandex has 48 production lines, with capacity of 42 thousand tons / year. It is the largest spanning spanning production company in China.

Benefiting from the overall good turn of the spandex industry, since June 09, the Huafeng spandex production line has basically maintained its full load production status. With the price of spandex gradually rising, the performance of Huafeng spandex has improved significantly.

In January 18th, Huafeng spandex announced its performance bulletin. In the 09 year, its sales revenue was 1 billion 196 million yuan, up 17.74% from the same period last year, achieving net profit of 110 million yuan and earnings per share of 0.30 yuan, of which 4 yuan achieved net profit of about 44 million 50 thousand yuan, achieving 0.12 yuan per share.

While enhancing the scale advantage, the company adjusts its product structure through developing warp knitted spandex to raise the gross margin level.

Warp knitted spandex market demand increased rapidly, the product price is higher than the general spandex product 3000 yuan / ton, the domestic warp knitting market has been monopolized by Ying Wei Da and Korea Xiao Xing.

After the key development of the company, the proportion of warp knitted Spandex Products has increased significantly, reaching more than 30% in January. It is estimated that the output of warp knitted spandex will reach more than 6000 tons in 10 years.

Benefit spandex industry boom to maintain "recommended" rating

The downstream demand of spandex will continue to be strong, and the supply and demand situation of the industry will continue to increase. We expect that the average price of spandex will reach 60000 yuan / ton in the next 10 years. At this price level, it is estimated that the 10 year EPS of the 40D will reach 0.85 yuan, corresponding to the current price earnings ratio of 13.7 times. We expect that the EPS of the Huafeng spandex 09-11 is 0.30, 1.65 and 1.74.