\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 93 Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) )
Matters:
According to China Grain and oil information network, thousands of workers from Canada The Pacific Securities Co.Ltd(601099) Railway Limited (CP), Canada's second largest railway company, went on strike due to dissatisfaction with their treatment. The strike will have a serious impact on the transportation of potash fertilizer to the port.
Guoxin chemical's view:
1) the company's strategic transformation focuses on the potash business and is expected to fully benefit from the high prosperity of the potash industry. The company acquired 100% equity of Zhongnong potash fertilizer in 2015 and introduced potash fertilizer business. After Guofu invested in 2019, it successively stripped off its original businesses such as grain trade and shipping business, focused on potash mining, potash fertilizer production and sales, and successfully transformed and focused on potash fertilizer business. According to the performance forecast of the company in 2021, it is estimated that the annual net profit attributable to the parent company will be 830930 million yuan, and the net profit attributable to the parent company after deduction of non parent company will be 219319 million yuan, of which the net profit attributable to the parent company after deduction of non parent company is expected to be 130230 million yuan in the fourth quarter of 2021, with a year-on-year increase of 160% - 360% and a month-on-month increase of 120% - 290%.
2) the global potassium resources are unevenly distributed and present an oligopoly situation, and the overseas supply is highly uncertain. Only 14 countries in the world produce potash fertilizer. Canada, Russia and Belarus together account for more than 66% of the total reserves of global potash resources, and the production capacity of the world's top seven overseas potash fertilizer production enterprises accounts for as much as 83%. Belarus has suspended the circulation of potash fertilizer goods due to sanctions from the European Union and the United States; Russia announced the suspension of fertilizer export due to geographical conflict; The strike of workers of CP company in Canada may have a serious impact on the transportation of potash fertilizer, and there is a high degree of uncertainty in the supply of overseas potash fertilizer.
3) the price of potash fertilizer has risen sharply, China is short of potash fertilizer resources, and the price of large contract has reached a new high. With the effective control of the global epidemic, the recovery of potash demand is expected to be strong, and countries have significantly increased their attention to food security, pushing the demand for potash further higher, making the global potash market reach a 10-year high price. In 2021, China's Salt Lake potash fertilizer increased by 70.3%. China is the world's largest potash fertilizer demander, with an external dependence of more than 50%. Recently, China signed a 2022 potassium fertilizer contract with potash company, with the price of 590 US dollars / ton CFR, a new high since 2008, an increase of 343 US dollars / ton compared with 2021.
4) the company has an existing potash production capacity of 1 million tons / year and continues to expand the reserve of potash resources. The company's 1 million T / a potash mining and processing project in Dongtai mining area, GanMeng Province, Laos, including the existing 250000 t production unit quality and efficiency improvement technical transformation and 750000 t potash expansion and transformation project, has started the commissioning on September 16, 2021, and it is expected to achieve a potash fertilizer output of 1 million tons in 2022. The company plans to purchase 56% equity of agricultural potassium resources by issuing shares and paying cash at a consideration of RMB 1.764 billion. The core asset of agricultural potassium resources is the mining right of potash mine with an area of 179.8 square kilometers in Pengxia nongbo village, nongbo County, Gammon Province, Laos. If the acquisition is successful, the company is expected to become the largest potash fertilizer resource enterprise in Asia, and plans to form a potash fertilizer production capacity of at least 3 million tons in 3-5 years.
5) profit forecast: we estimate that the net profit attributable to the parent company in 21-23 years is 746 / 1527 / 1787 million yuan respectively, the corresponding EPS is 0.99/2.02/2.36 yuan respectively, and the corresponding PE is 29 / 14 / 12x respectively. Potash fertilizer is one of the three major chemical fertilizers. The main resources are concentrated in Canada, Russia and Belarus. Russia and Belarus face sanctions, and Canada faces railway workers' strike. There is great uncertainty on the supply side. We are optimistic that the potash fertilizer industry will maintain a high boom. The company is a rare potash fertilizer production enterprise in China and the first enterprise in China to realize the industrial production of overseas potash projects. It has a potash production capacity of 1 million tons / year and plans to increase the production capacity to more than 3 million tons / year within 3-5 years. For the first time, give a "buy" rating.
6) tips on the risk of epidemic situation and local economic fluctuation; The construction progress of new capacity of potash fertilizer may be lower than expected; The high price of potash fertilizer leads to lower downstream demand than expected.
Comments:
The company has experienced many business changes in history, successfully completed strategic transformation and focused on potash business
The company, formerly known as Guangzhou refrigerator Co., Ltd., is mainly engaged in the design, manufacturing and sales of refrigerator compressors. It was listed on Shenzhen Stock Exchange in December 1998. In September 2009, the company carried out a major asset restructuring, replacing all the assets and liabilities of the original refrigerator compressor with 100% equity of Guangzhou Zhiyuan Oil Industry Co., Ltd. held by Guangzhou Dongling Industrial Group Co., Ltd., and Guangzhou Zhiyuan Oil Industry Co., Ltd. became a wholly-owned subsidiary. In December 2009, it was renamed Guangzhou Dongling grain and Oil Co., Ltd. and transformed into a grease processing enterprise. In October 2010, the company transferred the equity of Yuantong shipping (Hong Kong) Co., Ltd. related to shipping business under Zhiyuan holding to the company, and renamed Jiangsu Zhiyuan Industrial Co., Ltd. as Jiangsu Dongling Logistics Co., Ltd., with its main business being shipping business. In 2015, the company further deepened the layout of shipping and grain trade business.
The company's strategic transformation and layout of potash business. In 2015, the company purchased 100% equity of Zhongnong international potash Development Co., Ltd. (hereinafter referred to as "Zhongnong international") held by 10 issuing objects such as Zhongnong group by means of non-public offering of shares, and indirectly held 90% equity of Zhongnong potash fertilizer Co., Ltd. (laos), introducing potash fertilizer business for the company. In March 2016, the company changed its name to Dongling international, and its business scope includes potash mine development, potash fertilizer production and sales, grain trade, warehousing and logistics, etc.
In July 2019, Dongling industrial transferred 50% of its shares to Guofu investment and became a concerted actor with Guofu investment. In April 2020, the company stripped off grain trade and shipping business, focusing on potassium mining, production and sales of potassium fertilizer; In September 2020, it was renamed Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) investment (Guangzhou) Co., Ltd.
At present, the company's Zhongnong international potash development company has 35 square kilometers of potash mining right in Gammon Province, Laos. The total reserves of potash mine are 1.002 billion tons, converted into 152 million tons of pure potassium chloride. In 2020, it produced 251700 tons of qualified potash fertilizer products and sold 235400 tons of potash fertilizer. The company's 1 million T / a potash fertilizer reconstruction and expansion project has completed the connection of the main works of the mine in June 2021, the installation and commissioning of excavation and mining equipment from July to September 2021, the construction of filling main works and beneficiation main process line in September, and the feeding test run was started on September 16, 2021. By the end of 2021, the potash start-up rate has reached 80%. The company plans to increase the production capacity to more than 3 million tons / year in 3-5 years and build Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) into a world-class potash fertilizer supplier with international influence.
