Performance Doubled! Huafeng Chemical Delays Two Major Chemical Projects to 2030

Semi-annual Performance Warms Up Significantly; Net Profit Attributable to Parent Doubles Year-on-Year

The financial report shows that in the first half of 2026, Huafeng Chemical achieved operating total revenue of 14.166 billion yuan, a year-on-year increase of 16.73%; and realized net profit attributable to parent of 1.983 billion yuan, a significant year-on-year increase of 101.64%, achieving doubled development.

Breaking it down by sector, the company's core chemical fiber (spandex) business performed impressively, achieving operating revenue of 5.387 billion yuan during the period, a year-on-year increase of 27.82%; operating costs were 4.201 billion yuan, a year-on-year increase of 22.52%; the sector's gross margin reached 22.02%, an increase of 3.37 percentage points year-on-year, indicating a significant improvement in profitability.

Spandex Price Spread Continues to Recover; sector Bottoming Out Combined with Cost Advantage Releases Dividends

In the first half of 2026, the spandex sector initiated a recovery from historical price lows. The sector as a whole was in a state of low downstream inventory. Combined with geopolitical factors driving price fluctuations in energy and chemicals, the price spread to spandex items continued to expand, significantly restoring corporate profit margins and greatly improving the sector's operating ecological stability.

As a global leader in polyurethane, Huafeng Chemical ranks first globally in the production of spandex, polyurethane stock solution, and adipic acid. Relying on two major production bases in Zhejiang and Chongqing, the company possesses sector-leading competitiveness in scale advantages, integrated manufacturing chains, cost manage, and technological R&D.

sector analysis points out that the current penetration rate of spandex in fields such as medical care and automotive interiors remains low, and there is broad space to differentiated applications in the future, indicating the sector has possible to sustained development in the medium and long term.

Phase II of PTMEG manufacturing Chain Project Delayed to prevent Raw Material Capacity Over-Competition

An announcement released on the same day shows that the company's annual 240,000-ton PTMEG spandex manufacturing chain deepening project Phase II has once again adjusted its construction schedule, with the completion and commissioning postponed from the original February 2027 to December 2030.

The project has a total investment of 2.84 billion yuan. The Phase I project started construction in January 2025, and the main structure has currently been topped out, with construction proceeding smoothly. As of June this year, the project has accumulated an investment of 612 million yuan, with an overall investment progress of 21.56%.

Regarding the reason to the delay, the company explained that in recent years, domestic chemical companies have concentrated on expanding PTMEG production, leading to a massive excess of upstream raw material capacity, while consumption development in downstream textiles and elastic fabrics has slowed, and new spandex capacity is relatively limited. If production commenced on schedule, it would exacerbate internal competition within the sector, leading to low product gross margins and project returns falling short of expectations. The company will implement a strategy of construction in batches according to demand, waiting to the sector's supply-demand stability to enhance before advancing Phase II construction.

Billion-Yuan Natural gaseous Integration Project Delayed to prevent BDO sector Overcapacity Risks

Another major project of the company——the annual 1.1 million-ton natural gaseous integration project Phase I, has been postponed from the original December 2026 production start to December 2030. The project has a total investment of 5.02 billion yuan and is a core strategic project to the company to layout upstream gaseous sources and build low-cost BDO capacity. Upon production, it can extend multiple high value-added manufacturing chains such as PTMEG, PBAT biodegradable plastics, and NMP.

The company stated that from 2024 to 2025, a significant quantity of new domestic BDO capacity was released centrally, and the sector has already seen serious overcapacity. Downstream demand to PBAT, spandex, and polyurethane cannot match the increase in supply. BDO prices continue to decline, and the sector generally faces losses, cost inversion, and insufficient operating rates.

If extensive investment in construction continues at present, the project's production timing might face the peak of sector overcapacity head-on, continuously dragging down the company's cash flow and profitability performance. Based on considerations of prudent operation and cash flow security, the company has suspended civil construction and plans to restart construction after sector capacity clears and the market warms up.

Overall Business Strategy Tends to Be Prudent; sector Cycle Thinking Guides Expansion Pace

This significant warming of performance and the simultaneous delay of two major projects reflect Huafeng Chemical's business philosophy of profiting with the direction and controlling expansion counter-cyclically. It realizes profits during the recovery phase of this spandex cycle while avoiding the overcapacity cycle of the upstream raw material sector, safeguarding the company's overall profit condition and prolonged steady research.