\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 141 Hubei Xingfa Chemicals Group Co.Ltd(600141) )
Event: on March 21, the company released its 2021 annual report. In 2021, the company achieved an operating revenue of 23.607 billion yuan, a year-on-year increase of 28.88%; The net profit attributable to the parent company was 4.247 billion yuan, a year-on-year increase of 583.58%. Among them, Q4 achieved an operating revenue of 7.027 billion yuan in 2021, with a year-on-year increase of 126.90% and a month on month increase of 4.44%; The net profit was 1.759 billion yuan, a year-on-year increase of 571.71% and a month on month increase of 30.60%.
Comments:
The profitability of main products has increased greatly, and the release of production capacity has enhanced the advantage of scale. During the reporting period, the chemical industry ushered in a boom cycle, and the profitability of the company’s main products increased significantly. In 2021, the average selling price of the company’s phosphate rock, yellow phosphorus, fine phosphorus salt, ammonium phosphate, silicone, glyphosate and other products increased significantly, with a year-on-year increase of 35.77%, 64.15%, 24.70%, 50.69%, 50.59% and 95.86% respectively. In 2021, the prices of Q4 phosphorus ore, yellow phosphorus, fine phosphorus salt, ammonium phosphate, glyphosate and other products increased by 91.17%, 145.51%, 109.90%, 54.20% and 109.43% respectively year on year, and 30.68%, 26.62%, 82.18%, 4.20% and 2.31% respectively month on month. In addition, the company has effectively controlled the cost by virtue of the industrial chain advantages of “integration of mining, electrification, phosphorus and silicon salt” and “combination of mining and fertilizer”, which has weakened the impact of the sharp rise of raw materials on the company’s raw material cost to a certain extent. Therefore, benefiting from the sharp rise in product prices and the company’s cost control ability, the company’s overall profitability has been significantly enhanced. In 2021, the company’s gross profit margin reached 33.37%, an increase of about 17.2pct year-on-year. In terms of production capacity, the company currently has a fine phosphate production capacity of 200000 tons / year; The production capacity of ammonium phosphate is 1 million tons / year; Phosphate rock production capacity is 4.15 million tons / year, 2 million tons / year under construction, and it is expected to be completed in Q4, 2022; Glyphosate production capacity is 180000 T / A, 50000 T / A is under construction, and it is expected to be completed in Q3, 2022; Silicone production capacity is 360000 T / A, 400000 T / A is under construction, and it is planned to be completed by the end of 2023; The capacity of wet electronic chemicals is 80000 T / A, and the capacity under construction is 80000 T / A. It is expected to be completed in 2022h2. With the gradual release of the company’s capacity under construction and the high prosperity of phosphorus chemical industry, silicone, wet electronic chemicals and other industries, the company’s market influence and overall performance in many fine molecule industries are expected to be further improved.
The production capacity and industrial chain of wet electronic chemicals are complete, and the national large fund is introduced to consolidate the capital strength. Xingfu electronics, a subsidiary of the company, has a capacity of 30000 tons / year of electronic grade phosphoric acid, 20000 tons / year of electronic grade sulfuric acid and 30000 tons / year of electronic grade etching solution. Among them, the metal ions of electronic grade phosphoric acid have been controlled within 10ppb, and the metal ions of IC grade sulfuric acid have been controlled within 5ppt (G5). In terms of customers, it has been supplied in batch to Semiconductor Manufacturing International Corporation(688981) , Huahong group, Changjiang storage and other well-known semiconductor wafer foundry in China. At the same time, Xingfu electronics is building a production capacity of 70000 tons / year of electronic grade sulfuric acid and 10000 tons / year of electronic grade hydrogen peroxide. After completion, it will further enhance the company’s comprehensive strength in the wet electronic chemical industry. In addition, in terms of upstream raw materials, the company has a production capacity of 80000 T / a industrial hydrogen peroxide and 800000 T / a industrial sulfuric acid, which can effectively reduce the negative impact of raw material cost fluctuations and ensure the overall profitability of wet electronic chemicals. In December 2021, the company announced that its subsidiary Xingfu electronics planned to introduce 15 strategic investors with “big fund phase II” as the lead investor in the form of non-public agreement. The 15 strategic investors will increase the total capital of Xingfu electronics by 768 million yuan (including 240 million yuan for “big fund phase II”). After the capital increase, the above strategic investors will hold 30.77% equity of Xingfu Electronics (including 9.62% equity for “big fund phase II”). The introduction of strategic investors will provide sufficient funds for the rapid development of the company and help accelerate the construction of the company’s production capacity.
Strong and strong combination, layout phosphorus new energy materials and high value-added silicone products. In the field of new energy, the company signed a cooperation agreement with Zhejiang Huayou Cobalt Co.Ltd(603799) in December 2021, giving full play to the resources and industrial advantages of both sides, and jointly planned to build a 300000 t / a iron phosphate production capacity project. At present, the project implementation company Hubei Xingyou New Energy Technology Co., Ltd. has been established, and the company has subscribed part of the capital contribution. The first phase plans to build a 100000 t / a iron phosphate project. In addition, the company has a silicone monomer production capacity of 360000 T / A and a silicone monomer production capacity of 400000 T / A under construction. It is expected to be completed by the end of 2023. At that time, the comprehensive competitiveness and market influence of the company’s silicone industry will be further improved. In addition, a series of silicone downstream high-value product projects jointly developed by the company with Shenzhen Zheng’an and Shanxi topological Lijie have been started, which will further extend the company’s industrial chain and improve the added value of silicone products.
Profit forecast, valuation and rating: benefiting from the price increase of main products and the company’s good cost control mechanism, the company’s profitability will be greatly improved in 2021. We maintain the company’s profit forecast for 20222023 and add the company’s profit forecast for 2024. It is estimated that the company’s net profit attributable to the parent company in 20222024 will be RMB 4.646/51.13/5.715 billion respectively. We continue to be optimistic about Hubei Xingfa Chemicals Group Co.Ltd(600141) the continuous expansion of production capacity and the active promotion to the market of electronic chemicals and new energy materials, maintaining the “buy” rating of the company under the advantages of sufficient high-quality phosphate rock resources, phosphate rock electricity integration and phosphorus silicon salt synergy.
Risk tip: production capacity construction is less than expected, product price fluctuation risk, and landing risk of cooperative projects.
