\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 141 Hubei Xingfa Chemicals Group Co.Ltd(600141) )
Event: on March 27, the company issued the announcement of pre increase of performance in the first quarter of 2022. The company expects to realize a net profit attributable to the parent company of 1.7 billion yuan in Q1 in 2022, with a year-on-year increase of 379.35%; The net profit attributable to the parent company after non deduction was 1.68 billion yuan, a year-on-year increase of 379.14%.
Agrochemical products and organosilicon continued to enjoy a high boom, and the complete industrial chain contributed to a significant increase in profits. According to Ifind data, since 2022, the prices of the company’s main phosphate rock, yellow phosphorus, monoammonium phosphate, diammonium phosphate, silicone, glyphosate and other products have increased by about 70.6%, 104%, 37.8%, 37.2%, 38.7% and 155% respectively compared with the average price of 2021q1. Due to the covid-19 epidemic and the geopolitical conflict between Russia and Ukraine, the global food price has increased significantly, which has improved the prosperity of the whole agrochemical industry. In addition, driven by the high price of agricultural products, the price of agricultural products has been kept high. At the same time, 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 material prices on the company’s raw material cost to a certain extent. In 2021, the joint-stock enterprises and holding enterprises of the company completed and put into operation 400000 T / a synthetic ammonia project and 3 million T / a low-grade collophanite beneficiation and deep processing project respectively. The completion of relevant projects also led to significant year-on-year growth in the production and sales of phosphate fertilizer in 2022q1.
The demand for ddmso and wet electronic chemicals has increased greatly, and the synchronous expansion of production capacity will create future growth. Under the rapid development trend of downstream carbon fiber and integrated circuit industry, the company’s main new material products such as dimethyl sulfoxide (DMSO) and wet electronic chemicals have strong demand, and the product price continues to rise. DMSO can be used as pesticide and pharmaceutical intermediates, or as cleaning agent in the manufacturing process of integrated circuits. In addition, DMSO also needs to be used as solvent in the production process of carbon fiber. With the rapid development of integrated circuits and carbon fiber industry, the proportion of DMSO in these two fields is also gradually increasing. However, due to the danger of DMSO production, only a few enterprises in the world can realize large-scale mass production of DMSO. At present, Xinjiang Xingfa, a wholly-owned subsidiary of the company, and Chongqing Xingfa, a joint venture, have a DMSO capacity of 20000 tons / year respectively. Meanwhile, Xinjiang Xingfa will build a new DMSO capacity of 20000 tons / year in June 2022. At that time, the company will have a DMSO capacity of 60000 tons / year and an equity capacity of about 50000 tons / year. In terms of wet electronic chemicals, the company is building a production capacity of 70000 T / a electronic grade sulfuric acid, 20000 t / a electronic grade etching solution and 10000 t / a electronic grade hydrogen peroxide. After completion, it will further enhance the company’s comprehensive strength in the wet electronic chemicals industry.
Profit forecast, valuation and rating: benefiting from the continuous high boom of main products, the company’s Q1 performance in 2022 exceeded expectations. We raised the company’s profit forecast from 2022 to 2024. It is estimated that the company’s net profit attributable to the parent company from 2022 to 2024 will be 53.47 (up 15.1%) / 61.84 (up 20.9%) / 6.749 (up 18.1%) billion yuan respectively, and the corresponding EPS will be 4.81/5.56/6.07 yuan / share respectively. The current stock price will only be about 7 times that of PE in 2022. We maintain the company’s “buy” rating.
Risk tip: production capacity construction is less than expected, product price fluctuation risk, and landing risk of cooperative projects.
