Semi-annual reports of listed companies reveal rising revenue of cellulose fibers in H1

Many unexpected incidents occurred in the first half of 2022 both at home and abroad. The Russia-Ukraine conflict, the repeated epidemics, and the Fed's sharp interest rate hikes have led to violent fluctuations in the global commodity market. From the perspective of the cellulose fiber industry, VSF, VFY and lyocell prices have been rising and semi-annual reports of Chinese listed companies involved in these products have been disclosed. Let us take a look at the details.

Jilin Chemical Fiber: the company is mainly engaged in the production and sales of VSF, VFY and carbon fiber. During the reporting period, the revenue of the company slightly increased with the growth of VFY trading volume and price, but due to the larger increase in cost, the profit failed to increase in the meantime. The revenue of VFY was 1.236 billion yuan, a year-on-year increase of 28.07%, and that of VSF was 544 million yuan, a year-on-year decrease of 14.21%

Aoyuan Beauty Valley: the company is mainly engaged in bio-based fibers (lyocell and VFY) and medical beauty business. During the reporting period, the sharp decline in the company's revenue was mainly attributed by the divestiture of the real estate business. In terms of bio-based fibers, with the start-up of lyocell plants and rising VFY price, the revenue of this segment has increased significantly, but the gross profit margin has fallen sharply.

Nanjing Chemical Fiber: the company mainly produces and sells VSF and lyocell. During the reporting period, the average daily output of a single VSF line was more than 130 tons. The line 2 has not yet started up with the influence of the market and epidemic. In the first half of 2022, the output of VSF was 17.782kt, the sales volume was 18.326kt, and the sales income was 208.67 million yuan. 

Sanyou Chemical: the company's main products are VSF, soda ash, PVC, caustic soda and silicone. During the reporting period, the output of VSF was 356.4kt (down 27.1kt year-on-year), the sales volume was 339.9kt (down 1.1kt year-on-year), and the net profit of the viscose segment was -206 million yuan, which was 488 million yuan in the same period last year.

Xinxiang Chemical Fiber: the company mainly produces and sells VFY and spandex. Although there was little change in revenue during the reporting period, the net profit fell sharply, which was mainly caused by the sharp decline of spandex gross profit. The revenue of VFY business increased significantly, while the gross profit fell slightly.

Zhongtai Chemical: the company is mainly engaged in chlor-alkali chemical and viscose textile industry. During the reporting period, the output of viscose fiber was 297.6kt (a year-on-year increase of 17.6kt), and that of rayon yarn was 149.1kt (a year-on-year increase of 1kt). The revenue for each was respectively 1.721 billion and 1.9 billion yuan, an increase of 44.65% and 22.37% year-on-year. The increase in revenue of the viscose business was mainly due to the rising price and growing sales. It is noteworthy that after the company acquired 8% of Henghui Medical's shares and increased capital, the its shares have reached 43.5%. Moreover, it also signed a concerted action agreement with the second shareholder to gain control. Henghui Medical is mainly engaged in the business of spunlace nonwovens, and 2 lines have been put into operation.

To sum up, in addition to Aoyuan Beauty Valley's sharp decline in revenue due to the divestiture of the real estate business among cellulose fiber companies, there is no big change in other companies on yearly basis. The revenue of each company's viscose-related business has increased, but there is no increase in profit. Although the price of cellulose fiber has risen significantly, the feedstock cost has gained even bigger increase, so the semi-annual reports of the companies is not reflected to be good. In the second half of the year, high raw materials combined with weak end-user demand will lead to misery in the midstream processing link, and the low operating rate in downstream of the industrial chain will be transmitted to upstream sector, and the falling price of upstream products is expected to ease the pressure of the midstream processing link.