\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 33 Guangxi Yuegui Guangye Holdings Co.Ltd(000833) )
Core view
The price of sulfur rises sharply with the price of oil and gas, and drives the price of sulfuric acid up. Sulfur mainly comes from the sulfur recovery unit of natural gas treatment plant and refinery, and its price is related to the price of natural gas and crude oil. 90% of the downstream of sulfur is sulfuric acid, while the downstream of sulfuric acid is mainly titanium dioxide by sulfuric acid method, phosphorus chemical industry (phosphate fertilizer, calcium hydrogen phosphate), fluorine chemical industry (hydrofluoric acid), caprolactam, etc. Benefiting from the rising oil and gas prices and the high prosperity of downstream phosphate fertilizer, the price of sulfur has increased from 500 yuan / ton at the end of 2019 to 3000 yuan / ton at present, and the price of sulfuric acid has increased from 150 yuan / ton to 625 yuan / ton in the same period.
The pyrite route is an alternative route for sulfur to sulfuric acid, and the price of pyrite continues to rise. Sulfuric acid production process is divided into sulfur based sulfuric acid, smelting by-product acid and pyrite based sulfuric acid. Sulfur based sulphuric acid is the main sulphuric acid production process, accounting for about 46% in China, and the rest is smelting acid 35% and ore acid 17%. With the sharp rise of sulfur price, the cost performance of smelting acid and ore acid is highlighted. As it is difficult to expand the capacity of smelting by-product acid, we believe that the new sulfuric acid will be more inclined to pyrite acid production, driving the upward movement of pyrite price center. In 2020, the price of Yunfu pyrite was about 480 yuan / ton, which rose to 1200 yuan / ton in October 2021. There was a slight correction in 21q4, and now it has rebounded to 950 yuan / ton.
The company is the leader of sulfur concentrate in China and is expected to benefit from the price rise of pyrite and sulfuric acid. Yunfuyun sulfur mining, a wholly-owned subsidiary of the company, has a production capacity of 3 million tons of raw ore, 1.2 million tons of sulfur concentrate (refined pyrite, grade 48%), 500000 tons of – 3mm ore (grade 35%), 520000 tons of sulfuric acid, 200000 tons of phosphate fertilizer and 240000 tons of iron powder. According to the annual report data of 2020, the company’s sulfur concentrate output is 1.08 million tons, the average sales price is 331 yuan / ton (excluding tax, the same below), and the cost is 257 yuan / ton- The output of 3mm mine is 210000 tons, the average sales price is 228 yuan / ton, and the cost is 100 yuan / ton. The selling price of pyrite concentrate is significantly higher than that of ordinary pyrite concentrate in the market. According to the production capacity, the increase of 100 yuan / ton of pyrite price will bring 170 million yuan of gross profit thickening to the company.
We predict that the net profit attributable to the parent company in 2021 / 22 / 23 will be 260 / 523 / 538 million yuan, EPS 0.39/0.78/0.80 yuan, corresponding to 16.92/8.40/8.16 times the current price of PE. As the leader of sulfur concentrate sulfuric acid in China, the company is expected to benefit from the current high price of sulfur. “Coverage” for the first time.
Risk warning: the price of sulfur, sulfuric acid and sulfur concentrate fluctuates greatly; The downstream demand for sulfuric acid was lower than expected.
