The carbon fiber price has fallen and combined with weak demand. Since this year, carbon fiber companies have continued to face performance pressures, and the future direction of the industry is of great concern to the market.

During today's (September 5th) mid-term earnings conference, Zhang Guoliang, the chairman and chief engineer of Zhongfu Shenyi, told reporters from Star Daily and some investors that due to factors such as rapid growth of carbon fiber industry capacity and lower-than-expected demand, the product price has fallen and a phase of supply and demand imbalance has appeared in the market.

Regarding market expectations for the second half of the year, Zhang Guoliang responded that from the current situation, the carbon fiber industry is still in a phase of temporary supply and demand imbalance, and the product price range is at the bottom of the oscillation. It is expected that the supply and demand relationship will change with the enlargement and development of application markets and new application directions, and the inflection point may be approaching.

From the 2024 semi-annual report, during the reporting period, the company achieved revenue of 0.732 billion yuan, a year-on-year decrease of 30.65%; net income attributable to the parent company was 24.97 million yuan, a year-on-year decrease of 88.7%; and non-GAAP net loss was 18.45 million yuan, a year-on-year decrease of 109.33%, resulting in a loss from profit.

Zhongfu Shenyi stated that the decrease in revenue was due to changes in the supply and demand relationship in the carbon fiber market, intensified market competition, lower product sales prices, and a decrease in operating income compared to the same period last year. The decline in net income was mainly due to a decrease in product sales prices during the reporting period and a compression of profit margins.

However, specifically in terms of production and sales, the company achieved year-on-year growth in both production and sales in the first half of the year.

During the earnings conference, Zhang Guoliang introduced that in various fields, new energy sales accounted for over 45%, sports and leisure sales accounted for over 30%, and sales in other areas accounted for approximately 25%. However, due to the impact of the carbon fiber industry's expectations of certain application areas not being met and low sales prices, the company's profits did not increase.

In terms of profitability, in the first half of this year, the company's gross margin was 23.32%, a year-on-year decrease of 15.43 percentage points. According to Baichuan Yingfu data, the average price of domestic T700 (12K) carbon fiber in H1 2024 was 136.09 yuan/kg, a year-on-year decrease of 31.5%.

To turn the unfavorable business situation around, at the earnings conference, Jin Liang, Vice General Manager and Secretary of the Board of Directors of CFEEC, stated that in terms of raw material procurement, the company leverages the advantages of scale through centralized purchasing, integrates procurement resources, and reduces costs while increasing efficiency. In terms of the market, customized solutions are provided for different segmented markets, and multiple regional warehouses are deployed to shorten product delivery cycles, among other measures.

At the same time, the Science and Technology Innovation Board Daily has noticed that CFEEC is accelerating its layout in emerging tracks and overseas markets.

"Currently, the company's carbon fiber products have been applied in the industrial robot field; they have not yet been applied in the issued flying cars, but they have collaborated with customers in this field to develop and test related carbon fiber products." Regarding new business expansion, Liu Fang, Director and General Manager of CFEEC, stated that compared to traditional materials, carbon fiber has the advantages of light weight, high structural strength, and corrosion resistance, and it has broad application prospects in low-altitude flight and the field of robots. "As the demand for carbon fiber in the domestic aviation and aerospace sectors increases, the company continues to lay out high-end fields such as aviation and aerospace."

In terms of specific progress, Liu Fang introduced that in the first half of this year, CFEEC carried out work in the aerospace field, including verification of toughened resin prepreg, application verification of T1100 grade and M40X grade, and engineering preparation technology development of M55J grade and M60J grade high modulus products.

"In terms of revenue scale, the proportion of the aerospace field accounts for more than 5% of the total revenue," added Liu Fang.

At the earnings conference, Wang Nuan, Vice General Manager and Chief Financial Officer of CFEEC, introduced the company's layout and planning in overseas markets. He stated that overseas markets have been a key area of focus for the company in recent years, mainly involving applications in wind power, hydrogen energy, automobiles, and ships. The products include 49S-12K 24K, 45S-12K 24K, and 45-3K, and the company adopts a direct sales and agency model. In the first half of this year, the export volume increased compared to the same period last year, and the profit margin was higher than that in the domestic market.

"In the first half of 2024, the company's revenue from foreign markets was 44.7682 million yuan, a year-on-year increase of over 15%." added Yang Pingbo, an independent director of the company.

Looking ahead to future performance growth, Yang Pingbo said that in the medium and long term, the growth of demand in the civil aviation, sports and leisure, wind power blades, and pressure vessels industries is expected to support downstream development of the industry.