On March 11, the leader of phosphorus chemical industry Hubei Yihua Chemical Industry Co.Ltd(000422) ( Hubei Yihua Chemical Industry Co.Ltd(000422) ) announced that it would invest 3.565 billion yuan to build a 550000 T / a ammonia alcohol project in tianjiahe area of yaojiagang chemical park, Yichang, so as to provide supporting facilities for the supply of synthetic ammonia, methanol and other products and heat in the park.
Benefiting from the rising market prices of leading products, Hubei Yihua Chemical Industry Co.Ltd(000422) ushered in a retaliatory rebound in 2021, with an estimated profit of 1.5 billion yuan – 1.7 billion yuan, with a year-on-year increase of 11.95-13.68 times, the best level since listing.
In addition to the main business, relying on the advantages of resources and production technology, the company actively crosses the field of new energy and reaches an agreement with Ningbo Bangpu, a subsidiary of Contemporary Amperex Technology Co.Limited(300750) to reach cooperation on the integrated battery material supporting chemical raw material project, which is expected to open a new growth pole.
plans to invest 35.68 billion yuan in technical transformation
The announcement shows that the original production line of 550000 tons of ammonia will be invested and relocated in this year. Previously, Hubei Yihua Chemical Industry Co.Ltd(000422) built a 550000 ton synthetic ammonia production unit in Yichang Yiting chemical park to provide supporting facilities for Yichang factory to produce diammonium phosphate, pentaerythritol and other products. However, in response to the national Yangtze River protection policy, the above-mentioned production lines need to be relocated, of which 220000 tons of synthetic ammonia production line has been closed from 2016 to 2017, and the remaining 330000 tons of production line will be relocated before 2025. In addition, Hubei Yihua Chemical Industry Co.Ltd(000422) located in the above-mentioned Park, the annual output of 660000 tons of diammonium phosphate and 100000 tons of insurance powder must also be relocated by the end of 2025.
In this context, the company selected tianjiahe area of yaojiagang chemical park in Yichang City as the relocation address to rebuild relevant production lines. As the main battlefield of Hubei Yihua Chemical Industry Co.Ltd(000422) in the next 3-5 years, the park has assembled projects such as trimethylolpropane unit, photoinitiator, supporting raw materials and biodegradable materials. The planned projects such as iron phosphate and nickel sulfate will also be carried out here, and the 550000 T / a ammonia alcohol project to be constructed this time can provide supporting facilities for the above projects.
According to the plan, the total investment of the project is 3.568 billion yuan, the estimated sales revenue is 2.104 billion yuan / year, and the total profit is 353 million yuan / year. After completion, the annual production capacity of 460000 tons of liquid ammonia and 90000 tons of methanol will be formed, and the by-product is about 20000 tons / year of sulfuric acid. The company said that the process technology of the previous synthetic ammonia unit is backward, and the energy consumption and material consumption are high, which increases the product manufacturing cost. This technical transformation is conducive to reducing cost and increasing efficiency, while implementing the national requirements for energy conservation and environmental protection.
For the source of funds for the project, the company said it would solve it by self financing. Previously, Hubei Yihua Chemical Industry Co.Ltd(000422) once disclosed in the investigation of receiving investors that a refinancing may be arranged for the 550000 ton ammonia alcohol project in 2022.
It is worth mentioning that due to the relocation of the original synthetic ammonia unit, Hubei Yihua Chemical Industry Co.Ltd(000422) cleaned up the project at the end of 2021 and made provision for impairment of the unrecoverable part of the investment, resulting in a single quarter profit of only 23-223 million yuan in the fourth quarter, a significant decline compared with 761 million yuan in the third quarter, thus affecting the annual profit growth.
cross border new energy
As the “elder” of phosphorus chemical industry, Hubei Yihua Chemical Industry Co.Ltd(000422) located in Yichang, the “capital of phosphate rock”, has the actual equity production capacity of 1.3 million tons of urea, 1.26 million tons of diammonium phosphate, 840000 tons of polyvinyl chloride, 800000 tons of phosphoric acid and 2 million tons of sulfuric acid. With the supply side reform, the backward production capacity of phosphate fertilizer continued to withdraw, the industry supply decreased, while the rigid demand for agriculture was still increasing, pushing up the phosphorus chemical products into the rising channel. The data show that the current urea price is 290200 yuan / ton, up 38.41% year-on-year; The average price of monoammonium phosphate is about 2990 yuan / ton, an increase of 28.5% year-on-year; The average price of diammonium phosphate was 3700 yuan / ton, with a year-on-year increase of 29.1%. Benefiting from the rise in product prices, the company’s performance in 2021 rose sharply, and it is expected to realize a net profit of 1.5-1.7 billion yuan, with a year-on-year increase of 11.95-13.68 times, the best level since listing.
While the existing main business is moving towards a high point, Hubei Yihua Chemical Industry Co.Ltd(000422) relying on the advantages of phosphorus resources, began to seek transformation to new energy business.
In October last year, Hubei Yihua Chemical Industry Co.Ltd(000422) and Ningbo bangpudacheng integrated battery material supporting chemical raw material project, a subsidiary of Contemporary Amperex Technology Co.Limited(300750) reached an agreement of cooperation intention. The two sides will establish a joint venture to build and operate iron phosphate, nickel sulfate and its front-end phosphate rock, phosphoric acid, sulfuric acid and other chemical raw materials, as well as supporting phosphogypsum weekly transfer and phosphogypsum comprehensive utilization projects. According to the plan, the cooperation scale proposed in the early stage includes 300000 tons of iron phosphate and 120000 tons of nickel sulfate. In terms of cooperation mode, Hubei Yihua Chemical Industry Co.Ltd(000422) mainly works in the upstream, i.e. from phosphate rock to iron phosphate industrial chain, supporting Ningbo Bangpu. The company will also actively carry out research in the future.
Last December, Hubei Yihua Chemical Industry Co.Ltd(000422) and Stanley Agriculture Group Co.Ltd(002588) reached a cooperation intention. The two sides intend to establish a joint venture and take the joint venture as the main body to carry out new energy materials and phosphorus chemical projects, including joint investment and construction of new energy materials precursor iron phosphate and supporting facilities, comprehensive utilization of raffinate acid, new fertilizer and purified gypsum.
With the sharp increase in performance and the expectation of new energy, Hubei Yihua Chemical Industry Co.Ltd(000422) has also gone out of a wave of rising market in the secondary market, with an increase of 430.28% in the past year. The latest share price is 19.09 yuan / share, with a market value of 17.1 billion yuan.
