Chinese listed cellulose fiber companies post revenue decline in H1 2023

In the first half of 2023, the overall performance of the cellulose fiber industry exhibited narrow fluctuations. Among them, VSF, VFY, and rayon yarn were stable to stronger, while lyocell showed a weaker performance. Currently, all A-share listed companies have disclosed their semi-annual reports, let us take a look at the details.

Jilin Chemical Fiber: the company is mainly engaged in the production and sales of VFY and carbon fiber (with a capacity of 80kt/yr of VFY) and commissioned processing of VSF. During the reporting period, the company's revenue slightly declined, but net profit significantly increased. As for cellulose fiber, the revenue of VFY remained relatively stable with a slight decrease in volume and price increase (revenue of approximately 1.22 billion yuan, a 1% y-o-y decrease), while the revenue of VSF declined sharply due to changes in the operating model (revenue of about 1.52 million yuan, a 100% y-o-y decrease).

Aoyuan Beauty Valley: the company is mainly engaged in the production and sales of bio-based fibers (with a capacity of 40kt/yr of lyocell and 15kt of VFY) and medical beauty business. During the reporting period, the company's revenue slightly declined, and the net loss narrowed on yearly basis. As for cellulose fiber, lyocell and VFY are mainly produced and sold by its subsidiary, Hubei Golden Ring Green Fiber Co., Ltd., and the combined revenue of the two also showed a significant decrease.

Nanjing Chemical Fiber: the company is mainly engaged in the production and sales of VSF and PET foam materials. During the reporting period, the company's revenue slightly declined, and the net loss narrowed slightly. As for cellulose fiber, the sales volume of VSF was 19.578kt, with revenue of 214.16 million yuan. In addition, the company is actively promoting the production compliance of a 40kt/yr lyocell fiber project.

Sanyou Chemical: the company's main products are VSF, soda ash, PVC, caustic soda, and silicone. During the reporting period, the company's revenue and net profit both significantly declined, but the revenue from viscose-related products slightly recovered. As for cellulose fiber, VSF is operated by Xingda Chemical Fiber and Yuanda Fiber. The production of VSF was 356.2kt (roughly flat on yearly basis), with sales volume of 348kt (an increase of 8.1kt y-o-y), and the net profit of the viscose segment was -236 million yuan (compared to -206 million yuan in the same period last year).

Xinxiang Chemical Fiber: the company is mainly engaged in the production and sales of VFY and spandex. During the reporting period, the company's revenue dropped notably, and net profit increased but remained relatively low. As for cellulose fiber, the revenue of VFY was 1.16 billion yuan, a 7.61% y-o-y decrease.

Zhongtai Chemical: the company's main industries are chlor-alkali chemicals and viscose textiles. During the reporting period, the company's revenue and net profit both significantly declined, with most main products in a loss-making situation. As for cellulose fiber, the production of viscose fiber was 284.5kt (a decrease of 13.1kt y-o-y), and the production of rayon yarn was 169.5kt (an increase of 20.4kt y-o-y), with revenue of 1.033 billion yuan and 2.181 billion yuan respectively, a y-o-y decrease of 40% and an increase of 14.8%. The increase in revenue from the viscose business is mainly due to increased sales volume and price increases. In addition, Henghui Medical's 140kt/yr spunlace nonwovens project with 5 lines has been put into operation, and all of 12 lines are scheduled to start production by the end of Apr 2024.

In conclusion, the revenue of cellulose fiber companies has declined, and net profit showed varied performances. Jilin Chemical Fiber saw a significant recovery year-on-year, while most companies involved in viscose-related products experienced a decrease in revenue, with only Sanyou Chemical showing a slight recovery. The prices of VSF and lyocell both decreased year-on-year in the first half of the year. Therefore, it is reasonable for the revenue of VSF and lyocell businesses to decline under the condition of constant output. However, the price of VFY increased year-on-year. Nevertheless, the revenue of filament businesses for Jilin Chemical Fiber, Aoyuan Beauty Valley, and Xinxiang Chemical Fiber decreased. Jilin Chemical Fiber explained that it was due to the decrease in output, while the other two companies have not provided a clear explanation yet.