The domestic market share of three series of Huafeng Chemical's three series of products has been steadily ranked first

The company explained that, compared with the same period last year, in the first quarter of this year, new production capacity was released and product output increased
.
At the same time, with the recovery of downstream demand in the industry, the prosperity continued to rise, and the sales of main products increased significantly compared with the same period of the previous year
.
Affected by the relationship between market supply and demand, the sales prices of the main products have risen compared with the same period of the previous year, which can be said to be a rise in both volume and price, which has led to a substantial increase in operating income compared with the same period last year
.
In addition, the company paid close attention to internal management, strengthened cost and expense control, improved quality and efficiency, and effectively resolved fluctuations in the price of raw materials.
The gross profit margin of main products increased significantly, and the overall operating conditions and profitability achieved a significant year-on-year increase
.

Huafon Chemical, formerly known as Huafon Spandex, was established in 1999 and listed on the Small and Medium-sized Board of Shenzhen Stock Exchange on August 23, 2006
.

The chemical industry is highly cyclical, and the operating performance of Huafeng Chemical also has a relatively obvious reaction
.
In 2006, the year of listing, the company achieved an operating income of 764 million yuan and a net profit of 59 million yuan.
In 2007, its operating income and net profit reached 1.
434 billion yuan and 380 million yuan respectively, a year-on-year increase of 87.
70% and 549.
44%
.
Since then, the company's operating performance has moved forward in fluctuations.
In 2014, its net profit reached 411 million yuan
.
In 2015, it fell to 254 million yuan.
In 2016, the company suffered its first loss so far, with a loss of 304 million yuan
.
The reason is that the subsidiary Liaoning Huafeng's construction project in progress has been suspended due to potential safety hazards, and the accrued asset impairment loss is 437 million yuan
.
In 2017, the company turned losses into profits, with operating income of 4.
150 billion yuan and net profit of 385 million yuan
.

In 2019, Huafon Chemical acquired 100% equity of Huafon New Materials from the controlling shareholder through a combination of issuing shares and paying cash
.
After retrospective adjustment, in 2018, the company achieved operating income of 15.
129 billion yuan and net profit of 1.
937 billion yuan, a performance that has increased several times compared to 2017
.
In 2019, the company's operating income and net profit were 13.
940 billion yuan and 1.
742 billion yuan respectively, a slight decline from the adjusted 2018 performance
.

In 2020, under the epidemic, in the first half of the year, Huafeng Chemical's production capacity, product prices, raw materials, etc.
were more or less affected
.
In the second half of the year, as the epidemic was effectively controlled, downstream demand recovered, and new production capacity was released smoothly, the production and sales of the company's main products increased significantly year-on-year
.

Data show that in that year, the company achieved operating income of 14.
670 billion yuan, a year-on-year increase of 6.
42%, net profit of 2.
278 billion yuan, a year-on-year increase of 23.
71%, and net profit reached a record high
.

The increase in net profit was significantly higher than that of operating income, mainly due to the company's strengthening of internal cost and expense control, improvement in quality and efficiency, and an increase in the overall gross profit margin
.

Since the company has not disclosed the official 2020 annual report, for the time being, based on the data disclosed in the three quarterly reports, in the first three months of last year, the company's sales expenses, management expenses and financial expenses were 311 million yuan, 215 million yuan, and 84 million yuan respectively.
In the same period, it was 271 million yuan, 265 million yuan, and 92 million yuan, with a year-on-year change of 40 million yuan, -50 million yuan, and -08 million yuan.
With the year-on-year increase in operating income, the overall period expenses decreased by 58 million yuan
.
Its gross profit margin was 23.
73%, up 0.
87 percentage points year-on-year
.

Spandex production capacity will reach 520,000 tons

Scale effect is also the core competitiveness of a company
.
Huafon Chemical is pursuing economies of scale
.

In recent years, Huafon Chemical has actively participated in the expansion of production
.

On January 25 this year, Huafeng Chemical disclosed that it plans to invest in the construction of a 300,000-ton/year differentiated spandex project through its holding subsidiary Chongqing Spandex
.
The project has a total investment of 4.
36 billion yuan and is constructed in three phases.
The construction period is expected to be 6 years.
After reaching production, the average annual sales (including tax) is 8.
842 billion yuan, and the static investment payback period (after tax) is 5.
11 years (excluding the construction period)
.

This is the single largest investment project launched by Huafon Chemical so far
.
The company said that with the rapid development and maturity of the spandex market in China, the application technology of spandex continues to develop, the scope of application continues to expand, and the demand continues to grow steadily, especially for differentiated spandex products.

.
The expansion of the company's production is to implement the industrial development strategy of strengthening the main business, consolidate the industry position, increase the market share, consolidate and expand the company's scale advantage, enhance the industry's right to speak, promote the industry concentration, and promote the health and well-being of the spandex industry.
sequential development
.
In addition, through this expansion, the company can optimize the product structure, increase the proportion of mid-to-high-end products, and enhance profitability
.
The company said that the new equipment, new process and new technology adopted in the new project will further reduce the company's overall production cost
.

What does the one-time expansion of 300,000 tons/year mean? The 2020 semi-annual report disclosed that Huafon Chemical's spandex production capacity is 180,000 tons per year, ranking first in China and second in the world
.

At present, the first-phase 60,000-ton differential spandex project implemented in the early stage of Chongqing Spandex project has been put into operation, and the second-phase 40,000-ton basic construction has been completed
.
This means that if the 300,000 tons/year project is successfully completed, the company's annual production capacity of spandex will reach 520,000 tons
.
This capacity will be 2.
81 times its 185,000 tons/year at the end of 2020
.

Huafeng Chemical was originally mainly engaged in the processing, manufacturing, sales and technology development of spandex spandex products
.
In 2019, through the acquisition of Huafeng New Materials, the company expanded its main business from the single industry of spandex to the field of adipic acid and polyurethane stock solution
.

According to the data, as of the end of 2020, the company has 185,000 tons of spandex, 420,000 tons of polyurethane stock solution, and 740,000 tons of adipic acid production capacity.
The spandex production capacity ranks first in the domestic spandex industry and second in the world
.
The domestic market share of polyurethane sole solution production accounts for more than 60%, and the domestic market share of adipic acid production accounts for more than 30%, both of which are also the first in the global market share
.

Huafeng Chemical stated in the financial report that the company has formed an integrated production system from raw materials, intermediates to finished products, and has the advantages of large-scale industrial chain integration, which can ensure the stable supply of main raw materials in the production process and effectively alleviate the purchase of raw materials.
The impact of price fluctuations on production and operation
.
The important raw materials cyclohexanone, adipic acid and polyester polyol required for the company's production can not only be used by themselves, but also used for external sales
.
Because of this, the production and sales volume of the company's spandex, polyurethane stock solution and adipic acid ranks in the forefront of the industry, and the scale advantage is obvious, thus forming a cost advantage
.
Huafon Chemical also focuses on R&D and innovation
.
In the first three quarters of last year, the company's R&D investment was 355 million yuan, the same as the same period last year
.
As of the end of June 2020, the company has 190 valid patents, including 122 invention patents, 68 utility model patents, and nearly 90 invention patents are pending
.