\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 141 Hubei Xingfa Chemicals Group Co.Ltd(600141) )
Integrated layout of phosphorus chemical industry, traditional + fine, two wings flying together
The company is a leader in China’s phosphorus chemical industry. In the development process of nearly 30 years, the company has continuously strengthened the company’s phosphorus ore resources and water resources through mergers and acquisitions and self construction. On the other hand, the company has continuously expanded its business boundaries, successively arranged glyphosate, organic silicon, wet electronic chemicals and lithium iron phosphate, and improved the integrated layout of phosphorus chemical industry, It also realizes the two wings of traditional chemical industry + fine chemical industry. We believe that under the background of “double carbon”, the company’s phosphate rock resource mining and hydropower access standards will be increasingly strict, and the company’s phosphate rock and its own hydropower resources will bring a very deep moat of resources and costs to the company. At the same time, the company’s in-depth layout in traditional and fine phosphorus chemical business is also expected to continuously improve the company’s profitability.
Self provided hydropower + by-product reuse, the profitability of glyphosate and silicone of the company far exceeds that of its peers
Glyphosate: with the increase of planting area of genetically modified crops and the gradual withdrawal of herbicides such as paraquat from the market, the demand for glyphosate is expected to grow steadily Hubei Xingfa Chemicals Group Co.Ltd(600141) currently has a glyphosate production capacity of 180000 tons (50000 tons of new production capacity is expected to be put into operation in Q2 this year), and the production capacity has the advantage of scale. In addition, the company’s abundant hydropower resources can provide the company with low-cost and stable power supply. Under the dual carbon background, the company’s competitive advantage is expected to be further highlighted. According to our calculation, the production cost of yellow phosphorus and glyphosate of the company will be 2058 yuan / ton and 761 yuan / ton lower than that of its peers only from the perspective of power consumption.
Silicone: with the rapid development of new energy vehicles, photovoltaic and other industries, the demand for silicone is expected to maintain a high growth rate Hubei Xingfa Chemicals Group Co.Ltd(600141) currently, the design capacity of silicone monomer is 360000 tons, and the downstream capacity of 150000 tons of silicone rubber, 30000 tons of sealant and 20000 tons of silicone oil is formed; In addition, the company is building a capacity of 400000 tons of silicone monomer, which is planned to be completed and put into operation in June 2023. At present, the company’s ability to control the production cost of silicone ranks first in China. According to our calculation, the reuse of glyphosate by-product methyl chloride can reduce the production cost of Xingfa silicone by about 1400 yuan / ton. We believe that with the production of Xingfa silicone monomer in Inner Mongolia, the capacity scale superimposed with the advantages of “phosphosilicate synergy” circular industrial chain will further improve the comprehensive competitiveness and market influence of the company’s silicone industry.
Phosphate fertilizer is expected to maintain a high boom, and the company has obvious advantages in mineral fertilizer integration
According to the data of Longzhong chemical, up to now, the prices of monoammonium phosphate and diammonium phosphate in China are 3229 yuan / ton and 3650 yuan / ton respectively, with a year-on-year increase of 33.2% and 30.7% respectively. We believe that under the background of the current cost push and demand pull of the phosphate fertilizer industry, the phosphate fertilizer price is expected to maintain a high boom. At present, the company has 4.15 million tons of phosphate rock and 1 million tons of phosphate fertilizer (200000 tons of monoammonium phosphate and 800000 tons of diammonium phosphate). According to the company’s announcement, the 400000 tons / year synthetic ammonia project of Xingxing Lantian, a joint-stock company in Yidu Park, has been completed and put into operation in June 2021. The 1.2 million tons sulfuric acid plant in Yidu Xingfa phase II project is still in trial operation. According to our calculation, the production cost of each ton of ammonium phosphate produced by the company is more than 500 yuan / ton lower than that of phosphate fertilizer manufacturers without phosphate rock and synthetic ammonia production capacity in the industry, which means that even if the price of phosphate fertilizer drops, the company can continue to make profits in phosphate fertilizer business by virtue of cost advantage. In addition, with the subsequent operation of the company’s sulfuric acid plant, the production cost of ammonium phosphate will be further reduced after reaching the production capacity and efficiency. At that time, the company will realize the comprehensive coverage of the integrated raw material end of mineral fertilizer, and the profitability of the company’s phosphate fertilizer business will far exceed that of its peers.
The fine phosphorus chemical business continues to advance, and the profitability of the company is expected to continue to improve
With the rapid development of China’s semiconductor, display device industry and new energy vehicles, the company seized the opportunity and began to extend its application to high-tech barriers and high value-added fine chemical products while deepening its traditional business. In recent years, the company has focused on electronic chemicals with more development prospects, and has formed 30000 tons of electronic grade phosphoric acid (including 10000 tons of IC grade), 20000 tons of electronic grade sulfuric acid (all IC grade), 30000 tons of electronic grade etching solution (including 10000 tons of IC grade) and 15000 tons / year of IC grade hydrofluoric acid (30% equity). And join hands with Zhejiang Huayou Cobalt Co.Ltd(603799) , march into lithium iron phosphate in 2021. According to the company’s announcement, the company has a total of 16 production projects (including Xingfu Electronics) in 2022. We are optimistic about the company’s layout in the field of fine phosphorus chemical industry and believe that with the gradual development of the company’s electronic chemical business, it is expected to continuously improve the company’s profitability.
Profit forecast and valuation
The company is a leader in China’s phosphorus chemical industry. We believe that the company’s main products glyphosate, organosilicon and phosphate fertilizer are expected to maintain a high boom in the next few years. With the gradual promotion of certification of downstream customers, the company’s profit is expected to rise again. It is estimated that the company’s EPS from 2022 to 2024 will be 4.21, 4.96 and 5.48 yuan / share, and the corresponding PE will be 8.35x, 7.09x and 6.41x respectively. It will be covered for the first time and the company will be rated as “buy”.
Risk tips
Product price fluctuation; Customer development is less than expected; The production capacity is lower than expected; Environmental protection policy and safety accident risk.
