\u3000\u3000 Sichuan Development Lomon Co.Ltd(002312) (002312)
Event:
On February 22, 2022, the company announced that it planned to issue shares to Sichuan advanced materials group and Sichuan salt industry, the counterparties, to purchase 100% equity of Tianrui mining, with a transaction consideration of 956 million yuan. The main business of the target company Tianrui mining is the mining, beneficiation and sales of phosphorus ore. It owns the phosphate ore resources of tongchanggeng (No. 8 ore block) of laoheba Phosphate Mine in Sichuan Province. It is the mining right resource with the largest reserves in Mabian area in Sichuan Province, and has obtained the mining license corresponding to the phosphate ore with a production scale of 2.5 million tons / year.
On February 22, 2022, the company announced that the company plans to invest 12 billion yuan in Deyang ABA Ecological Economic Industrial Park to build Deyang Sichuan Development Lomon Co.Ltd(002312) lithium battery new energy material project, and plans to build a project with an annual output of 200000 tons of lithium iron phosphate, 200000 tons of iron phosphate and supporting products. The construction period of the project is planned from March 2022 to December 2026, and the project will be implemented by stages, Phase I project is tentatively scheduled to be completed and put into operation in December 2024, and phase II project is tentatively scheduled to be completed and put into operation in December 2026.
Key investment points:
Acquisition of Tianrui mining to improve the guarantee ability of phosphate rock resources
The company plans to issue shares to the counterparties Sichuan advanced materials group and Sichuan salt industry to purchase 80% and 20% equity of Tianrui mining respectively. Through friendly negotiation between all parties involved in the transaction, it is determined that the transaction consideration of 100% equity of Tianrui mining is 955749900 yuan, and the share issuance price of issuing shares to purchase assets is 7.67 yuan / share. Therefore, the number of shares to be issued in this asset purchase plan is 124608852 shares. Tianrui mining is mainly engaged in the mining and sales of phosphate rock. It has phosphate rock resources in tongchanggeng (No. 8 ore block) of laoheba phosphate rock in Sichuan Province, and has obtained the mining license corresponding to the phosphate rock with a production scale of 2.5 million tons / year. After the acquisition, the company’s phosphate rock production capacity will increase from 1.15 million tons / year to 3.65 million tons / year. The company’s phosphate production capacity in Mianzhu base in Sichuan is 1.8 million tons. It is the main production base of the company’s chemical fertilizer, compound fertilizer and industrial grade monoammonium phosphate. However, as the company’s Phosphate Mine in Mianzhu, Sichuan Province is closed due to the impact of the panda reserve, all phosphate ores used in Mianzhu production base need to be purchased externally, and more than 2 million tons of phosphate ores need to be purchased every year. Tianrui mining is the main supplier of phosphorus ore, the main raw material of longmang phosphorus chemical industry in recent years. The phosphorus ore provided by Tianrui mining has the advantages of short transportation distance, low cost, stable output and low content of phosphorus ore impurities, which has greatly contributed to the rapid improvement of the production capacity of industrial grade monoammonium phosphate of Listed Companies in recent years. The acquisition of Tianrui mining will help the listed company directly obtain high-quality and scarce phosphate rock resources in Sichuan Province, improve the company’s phosphorus chemical industry chain, further improve the guarantee ability of upstream phosphate rock resources in the company’s main production base, reduce the dependence on purchased phosphate rock and reduce the adverse impact of phosphate rock price fluctuation on the company’s profitability, Enhance the overall value and core competitive advantage of the phosphorus chemical industry chain of listed companies.
Relying on the advantages of resources and production capacity, the company continues to scale up the layout of lithium iron phosphate industrial chain. Relying on the advantages of high-quality phosphate rock resources and industrial grade monoammonium phosphate production capacity, the company actively develops the industry of iron phosphate and lithium iron phosphate new materials and continues to scale up. This time, the company signed an investment framework agreement with the Management Committee of Deyang ABA eco economic Industrial Park, invested 12 billion yuan to build Deyang Sichuan Development Lomon Co.Ltd(002312) lithium battery new energy material project in Deyang ABA Industrial Park, and plans to build a project with an annual output of 200000 tons of lithium iron phosphate, 200000 tons of iron phosphate and supporting products. The construction cycle of the project is planned from March 2022 to December 2026. The project is located in de’a Industrial Park, which has been fully supported by the industrial park in terms of construction land, public works consumption and energy consumption indicators. In addition, Deyang City has a good foundation of phosphate rock resources and phosphorus chemical industry, and Aba Prefecture is rich in lithium resources. The company is expected to give full play to its resource integration ability and strive for more resource element guarantee. Benefiting from the increase in the production and sales of new energy vehicles and the increase in the installed capacity of lithium iron phosphate batteries, the market demand for lithium iron phosphate is strong, the market demand is growing rapidly, and the product price continues to rise. According to China automotive power battery industry innovation alliance, in 2021, the installed capacity of lithium iron phosphate battery in China accumulated 79.8gwh, a year-on-year increase of 227.4%; In January 2022, the output of lithium iron phosphate battery in China was 18.8gwh, a year-on-year increase of 261.8%; The installed capacity of lithium iron phosphate battery was 8.9gwh, with a year-on-year increase of 172.7%. Under the policy background of China’s carbon neutral and long-term strategic goal, it is expected that the production and sales of new energy vehicles will continue to increase, the shipment of lithium iron phosphate batteries will continue to grow, and the market demand for lithium iron phosphate is expected to continue to maintain high-speed growth. Lithium iron phosphate is the downstream product of the company’s existing phosphorus chemical product industrial monoammonium phosphate. The company’s output of industrial monoammonium phosphate is more than 360000 tons, which is the largest industrial monoammonium phosphate production enterprise in the world. After the acquisition of Tianrui mining, the company will have an annual phosphate rock production capacity of 3.65 million tons. With the help of phosphate rock resource advantages, the company will effectively give play to Industrial Synergy and improve the profitability of the project.
The high prosperity of the industry continues, and the company’s main business is expected to continue to grow
Benefiting from the rise in product prices, the company achieved rapid growth in performance in 2021. The company expects to realize a net profit attributable to the parent company of RMB 900 million to RMB 1.1 billion in 2021, with a year-on-year increase of 34.58% – 64.49%, of which the amount affected by non recurring profits and losses is RMB 300 million to RMB 400 million. In 2022, the prices of the company’s main products continued the pattern of high volatility. According to wind, on February 22, the price of phosphate rock was 680 yuan / ton, an increase of 15.79% compared with the average price of 578 yuan / ton in 2021; The price of monoammonium phosphate is 3050 yuan / ton, an increase of 5.46% compared with the average price of monoammonium phosphate of 2892 yuan / ton in 2021; The price of calcium hydrogen phosphate was 3069 yuan / ton, an increase of 15.38% compared with the average price of calcium hydrogen phosphate of 2660 yuan / ton in 2021. With the continuous rise of global grain prices, the prosperity of relevant products is expected to continue, and the company’s main business is expected to maintain a certain growth in 2022.
Profit forecast and investment rating: the company has abundant phosphate rock resource allocation, and its core product industrial grade monoammonium phosphate maintains the leading position in the industry. At the same time, it actively plans the incremental market and continues to scale up the iron phosphate and lithium iron phosphate new material industry. Based on the principle of prudence, the impact of additional issuance on the company’s share capital and performance is not considered for the time being. It is estimated that the net profit attributable to the parent company in 2021, 2022 and 2023 will be 1.054 billion yuan, 835 million yuan and 929 million yuan respectively, and the corresponding PE will be 20.77, 26.23 and 23.57 times respectively. It will be covered for the first time and given a “buy” rating.
Risk tips: macroeconomic risks; Raw material price and supply risk; The downstream demand is lower than the expected risk; Project construction risk; Safety production risk; exchange-rate risks; Product R & D and application risks; The schedule of fixed increase is less than expected.
